These are the factors that go into gas prices
U.S. officials are looking at various options to bring down prices at the pump as prices soar to a record national average of more than $5 per gallon.
Some states have sought a reprieve by implementing temporary gas tax suspensions, and sources told The Hill on Monday that the White House is weighing a federal gas tax holiday. President Biden has also ordered an unprecedented release from the Strategic Petroleum Reserve and pressured oil companies to ramp up production.
Experts also say Biden’s recently announced trip to Saudi Arabia could be used to urge the country to ramp up production of oil.
Prices spiked after the U.S. sanctioned Russian oil during Moscow’s invasion of Ukraine, which began in February.
By April, the U.S. was producing 300,000 more barrels of oil per day than it was in mid-March. That production has leveled off since, and now some companies are hesitant to invest more in oil given how much could change in the time it takes for oil to come out of the ground and industry concerns about the effect of a possible transition away from fossil fuels and toward clean energy.
But prices have continued to climb.
While Republicans point the finger at Biden and Democrats, the president’s defenders point out a president has relatively little control over gas prices.
Here’s a closer look at the breakdown of what goes into gas prices.
Crude oil prices
The majority of gas prices, or 53.6 percent, come from the price of crude oil, according to the U.S. Energy Information Administration’s (EIA) 2021 gasoline and diesel fuel update.
Federal and state taxes
The next-largest portion comes from federal and state taxes, which account for just more than 16 percent of gas prices, the EIA said.
In the U.S., the federal motor fuel tax for gasoline is currently $0.184 per gallon. State taxes on gasoline range from around $0.576 per gallon in Pennsylvania and $0.511 per gallon in California to $0.0895 per gallon in Alaska and $0.16 in Hawaii.
When prices skyrocketed amid sanctions on Russian oil because of Moscow’s invasion of Ukraine, several states, including Connecticut, Maryland and Georgia, suspended their state gas taxes.
New York state also suspended its gas tax as recently as this month.
“Inflation is really hurting our families and they’re struggling to make ends meet so we said we need to provide relief for families,” Gov. Kathy Hochul (D) said of that decision.
Distribution and marketing
Another 15.6 percent of gas prices come from distribution and marketing. That figure includes shipping costs needed to move gas from the refinery to the terminal and other factors such as the prices of local competitors and the fueling location.
Refining costs and profits
The smallest percentage of gas prices, or 14.4 percent, comes from refining costs and profits, which vary by season and can change depending on demand and the type of technology used to refine the oil.
Rachel Frazin contributed to this report.