National Average: $3.837
Week Ago Average: $3.808
Year Ago Average: $2.859
In December, the former president of Shell Oil predicted that Americans could be paying $5 for a gallon of gasoline by 2012 as global demand for oil increased. Today, with the continued unrest in the Middle East pushing prices perilously close to $4 per gallon, this prediction seems all the more probable. According to analysts, as long as the situation in the Middle East remains unresolved and demand for oil increases, prices will continue to rise. Global demand is up to 87 million barrels per day and is expected to pass 88 million per day by the end of the year.
It’s time for America to get into the driver’s seat when it comes to gas prices. We must end our costly overreliance on foreign oil by increasing our domestic fuel production, improving the fuel efficiency of our vehicles, intensifying our renewable energy development, and cutting our energy usage. I have been fighting for these goals by supporting legislation that aims to increase our nation’s energy independence and gets gas prices under control.
For the next few weeks, I will be updating my blog with weekly posts on issues related to the rising gas prices. I welcome you to join this discussion and share your thoughts, concerns and ideas. To help facilitate our discussion of gas prices, I have put together the following Frequently Asked Questions and answers with resources from the U.S. Energy Information Administration (EIA):
What factors affect the price of gasoline?
The four main components of the retail price of a gallon of gasoline, and their share of the total price in February are:
- Crude Oil: 65%. The cost of crude oil as a share of the retail price varies over time and among regions of the country. Refiners paid an average of about $87.63 per barrel of crude oil, or about $2.09 per gallon, in February 2011.
- Refining Costs and Profits: 14%.
- Distribution, Marketing, and Retail Costs and Profits: 8%.
- Taxes: 13%. Federal excise taxes were 18.4 cents per gallon and State excise taxes averaged 22.44 cents per gallon.
Why have gas prices fluctuated so much in recent years?
EIA analysis of the petroleum market points to the price of crude oil as the main contributor to the general increase in retail gasoline prices since the start of 2009. Gasoline production and inventory levels relative to demand also influenced prices. The gradual improvement in the world and U.S economies during the winter, as well as increases in gasoline refiners margins have been pushing up gasoline prices over the last several months. Recent political events in the Middle East and North Africa, the source of about one third of world oil production, has led to an acceleration of crude oil and gasoline price increases.
Where does gasoline come from?
Gasoline is made from crude oil. Refineries take crude oil and break down its hydrocarbons into different products, called “refined products,” including gasoline, diesel fuel, heating oil, jet fuel, liquefied petroleum gases, and residual fuel oil. The characteristics of the gasoline depend on the type of crude oil that is used and the setup of the refinery at which it is produced. Gasoline characteristics are also impacted by other ingredients that may be blended into it, such as ethanol. The performance of the gasoline must meet industry standards and environmental regulations that may depend on location.
In 2007, U.S. refineries produced over 90% of the gasoline used in the United States. Less than 40% of the crude oil used by U.S. refineries was produced in the United States. About 45% of gasoline produced in the United States comes from refineries in the U.S. Gulf Coast (including Texas and Louisiana).
How much tax do we pay on a gallon of gasoline?
The Federal gasoline tax is 18.4 cents per gallon and the average State tax is 22.01 cents per gallon, as of January 1, 2010. In Virginia, the gasoline tax is 17.5 cents per gallon, with an additional 2% sales tax in areas where mass transit systems exist.
How many gallons of gasoline does one barrel of oil make?
U.S. refineries produce between 19 and 21 gallons of motor gasoline from one barrel (42 gallons) of crude oil. The remainder of the barrel yields distillate and residual fuel oils, jet fuel, and many other products. Refinery yields of individual products vary from month to month as refiners focus operations to meet demand for different products and maximize profits.
What is the outlook for energy prices?
EIA expects regular-grade gasoline retail prices, which averaged $2.76 per gallon last summer, will average $3.86 per gallon during the current driving season. The projected monthly average regular retail gasoline price peaks this year at $3.91 per gallon in early summer.
Find the answers to many more questions here.