Why does gasoline cost so much?

May 29, 2008 | By | 5 Replies More

There’s a lot of bad information floating around on the Internet.  For instance, many conservatives blame environmental regulations, but this argument is way off base.   Why?  Because 75% of the cost of gasoline is in the cost of the crude oil, not in the refining.

At Salon.com, Andrew Leonard spells it all out succinctly:

But questions about refinery capacity, environmental regulations and Balkanization of the overall market shrivel when compared with the real force responsible for the dramatic rise in gas prices over the past eight years. Far and away, the largest factor contributing to the total price of a gallon of gasoline in California (and anywhere else in the United States) is the cost of crude oil.

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Category: Energy, Environment

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (5)

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  1. Niklaus Pfirsig says:

    It should also be noted that the price of crude oil is not controlled by the oil producers, or the dynamics of supply and demand. The price of crude is determined by speculators in the commodities exchanges.

    This link

    http://www.globalresearch.ca/index.php?context=va
    describe the issues in some depth.

  2. grumpypilgrim says:

    "Far and away, the largest factor contributing to the total price of a gallon of gasoline in California (and anywhere else in the United States) is the cost of crude oil."

    This assertion is incomplete. The complete assertion would read: "…the cost of crude oil measured in U.S. dollars." The value of the dollar has crashed, leading to a run-up in many commodities.

  3. Dan Klarmann says:

    In early 2001 just as W took office, gas at the pump was about $2.00/gal and gold was about $260/oz yielding 0.0077 oz/gal.

    Today, I bought gas for 3.89/gal. and gold closed at $887/oz, or 0.0044 oz/gal.

    That's a price drop of 43%, if Gold is considered hard currency.

  4. grumpypilgrim says:

    I've pointed this out before, but here is what's happened to the dollar relative to the euro in the past two years:
    http://finance.yahoo.com/q/bc?s=USDEUR=X&t=2y

    Other major currencies show a similar devaluation of the dollar.

  5. john says:

    Hey! Found a funny promotion related to the escalating gas prices on Utterz called "Pain at the Pump: Get Even With Utterz", all you need to do is snap a picture of your gas bill on your phone, send it to go@utterz.com, and call 712.432.666 and explain what you would do with the money if it wasn't going toward gas. Send in your contribution and Utterz will send you the money for your gas!! More info here: http://moourl.com/d3svt

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