The price of gasoline

Not that I could tell from the number of people racing by me as I drove at 55 mph into work today, but Minnesotans are up in arms over the price of gas and it’s crippling their finances. A gallon of gas is going for an average of $3.95 today (it’s $4.08 at one station in Burnsville, according to twincitiesgasprices.com.

This week the major oil companies are scheduled to report their first quarter income and it’s expected to reveal high profits, which should spawn another round of complaints from politicians.

What goes into the price of a gallon of gasoline? Here’s an interesting graphic from PBS’ NewsHour.

gas_price_graphic.jpg

Let’s see if these numbers work.

A barrel of oil today is going for $111.42 a barrel, which is 42 gallons. That’s $2.65 a gallon.

At today’s price, 14% for refining is 55 cents. (Total so far: $ 3.20)

Eight percent for distribution and marketing is about 32 cents. (Total: $3.54)

And 13% for taxes is 51 cents, for a total of $4.05, or 10 cents more than we’re actually paying (Minnesota’s gas tax is about 27 cents, and 15 cents is credited to a wholesaler to encourage ethanol manufacturing. The federal tax is about 18 cents a gallon).

What can be done? As the famous maxim goes, “the cure for the high price of oil is the high price of oil.” Use less. Slow down.

  • Jon

    But what was the cost of a barrel of oil months ago when they purchased it before they started refining it?

    also, how much of a gallon of crude oil is actually capable of being turned into gasoline?

  • Bob Collins

    The price of gas isn’t based on the cost of the actual raw material at the time of purchase. It’s on the replacement cost.

    A barrel of oil produces almost 20 gallons of gasoline.

  • It’s not all doom and gloom, and we are not helpless in fighting the rising cost of gasoline.

    Last week, in a national conference call, St. Paul mayor Chris Coleman joined Energy Secretary Steven Chu and Transportation Secretary Ray LaHood to announce that the statewide Twin Cities Clean Cities program had displaced 135,175,133 cumulative gallons of gasoline from 2005 to 2009. In a ranking of gallons displaced during that period, the MN program was ranked #1 in the nation.

    So we are making some progress, albiet slowly, to break our addiction to oil.

    In the spirit of saving fuel, I’m bundling my grocery shopping with my commute home form work today. Never thought of that before, although I don’t know why.

  • JackU

    Not to be picky but, 27 cents (State) + 18 cents (Feds) is 45 cents not 51 cents. So unless I’m missing something there’s 6 of the 10 cents you’re looking for. Since most of the other calculations are “national averages”, regional variations could easily account for the other 4 cents.

  • bsimon

    “Use less. Slow down.”

    I’ll grant you that slowing down does have an impact on consumption, but comparable to paying $3.80 rather than $4. Compare that with ridesharing, at $2; or a 4-person carpool at $1. I know you’ve tried the bike commute as well; which has a $0 cost of gas. Granted, not all those options work for everyone; but compared to slowing down, save a heck of a lot more fuel / money.

    The unaccounted for variable is, of course, time (convenience). How high does the gas price have to get before people are willing to trade time and/or convenience for fuel consumption?

    I think it’ll take a new high of $5/gal. 4th of July weekend, anyone?

  • Bob Collins

    Picky back at you. 51 cents is the % indicated by the stats.

  • Ben Chorn

    In case you were wondering what a barrel of oil is Link in the US

  • kennedy

    People are often irrational about gas prices. I know someone who drives an SUV a mile and a half out of the way to save $0.05 per gallon.

    If they buy 10 gallons of gas, they save $0.50.

    Driving the 3 mile round trip at 20mpg, they burn $0.60 worth of gas.

  • BJ

    @kennedy I try and plan my Costco Trip around when my van needs a tank of gas, no extra miles and usually about 10 cents cheaper than the ‘normal’ gas station I fill up at.

  • Jim!!!

    Saturday I biked 12 mi for a growler of beer. I’m not sure how that relates but it was fun and rewarding.

  • Dave S.

    The graphic doesn’t show anything for profits. Obviously profits are being made, so where do they factor in?

  • Tony

    The cost of refining the gas should not be subject to costs of crude. The cost of making the gasoline will be consistant regardless of the price of oil. This should be reported as cents rather than %