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Concept: July 12, 2021. The Components of the Price of Gasoline

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The price of gasoline has several components that we are not necessarily aware of. Sometimes we believe that they have to reflect the international price of oil, but as we will see, this is not the case. The values I will give in this post are averages and they reflect what the article source provides.

The international price of crude oil represents 53% of the gasoline price we pay. This means that although it is an important part of the overall price of gasoline, it does not explain everything.

Transportation, distribution and marketing represent 18% of the total price of gasoline at the pump. Here we are including the profit margin that the selling company makes.

Taxes (federal, state and local) contribute 17% to the retail price of gasoline. As I mentioned in the first paragraph, this is an average. This price varies widely state by state, and city by city.

Finally, the cost of refining the oil into gasoline is about 12% of the gasoline price. This is the price component that gets affected when the refining process is affected by natural disasters that have occurred in the past.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.

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