Why Does Gas Cost So Much?

Why Does Gas Cost So Much?Why does gas cost so much? Crude oil is the biggest factor in the price of gas. Crude oil accounts for approximately three fourths of the pump price.
World oil prices are at record highs due largely to high worldwide oil
demand and OPEC controlling production.There are other contributing factors such as
politics and the fact that countries such as China and India are becoming huge users of crude oil.
Demand in China and India has grown in large part due to their
continuing rapid economic growth. As the two largest
economies of the third world, both consumers and manufacturers are
guzzling up energy at ever increasing rates.
Taxes have a large effect on the price of a gallon of regular gasoline, amounting to as much as 15% (not including county and local taxes).
City and county taxes can have
a very big effect on the price of gas in some areas as well.
From 2000 to 2007, total combined taxes averaged about 24% of the pump
gasoline price.
Refining costs adds approximately
10% to the price, although this varies from region
to region, due in part to the different gasoline formulations required
in different parts of the country.
When we ask why are gas prices so high, we
usually incorrectly assume much of it is distribution and marketing. In
fact, distribution, marketing, and retail dealer costs and profits are about 10% of the pump price.
Most gasoline is shipped from the refinery
first to terminals near consuming areas where it may be
blended with other products (such as ethanol) to meet local government
and market specifications, and is then delivered to
retail outlets. Some stations are owned and operated by
refiners, while others are independent businesses that buy
gasoline from refiners and marketers.
The price on the pump includes the
retailer’s cost to purchase the gasoline plus the costs of
operating the service station. It also reflects local market conditions
and factors, such as the desirability of the location and the marketing
strategy of the owner.
Why are gas prices so high? Unfortunately,
knowing the answer doesn’t solve the problem, and most experts
agree that there are no quick fixes. High gas prices are here to stay,
for at least a few years. Fortunately, we can somewhat overcome high
prices with gas mileage devices and through gas mileage improvements.

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