On Monday, Feb. 27, the Energy Information Administration (EIA) reported that U.S. gasoline prices have hit a national average of $3.72 per gallon, far above predictions earlier this month that the per gallon retail price of regular gasoline would peak at $3.65 this summer. The Institute for Energy Research closely monitors trends in the price of gasoline and has updated its analysis to include new data. IER’s analysis provides the following facts about gas prices:
- 76 percent of the price of gasoline is determined by the price of crude oil.
- 12 percent of the price of gasoline is determined by federal, state, and local taxes.
- The federal tax on gasoline accounts for 18.4 cents per gallon, while the volume-weighted average state and local tax is 30.4 cents per gallon.
- Refining costs account for 6 percent of the price of gasoline.
- Retail dealer’s costs and profits account for a combined 6 percent of the price of gasoline.
- Less than 5 percent of gas stations are owned by major oil companies.
- 60 percent of U.S. oil demand is imported from foreign countries.
- The world consumed 87.9 million barrels of crude and liquid fuels every day in 2011, the highest consumption rate in history.
- China is now the world’s second-largest consumer of oil behind the United States. In 2011, Chinese crude imports were up 8.2 percent over 2010 levels.
- The U.S. produced an average of 5.67 million barrels of crude oil every day in 2011.
- Production in the Gulf of Mexico is expected to fall by 90,000 barrels per day due to production declines in existing fields, permitting delays, and the Obama moratorium.
- Crude oil production in Alaska is projected to fall by 20,000 barrels per day both in 2012 and 2013.
- When President George W. Bush lifted the executive moratorium on offshore drilling, there was an immediate price decrease in the cost of oil.
- About 25 percent of U.S. supply of oil comes from OPEC countries, which have agreed to a production ceiling of 30 million barrels per day including Iraq’s production and some overproduction by member countries.
- U.S. monetary policy — particularly increases in the money supply through quantitative easing — have coincided with a surge in oil prices. Recent signals from the Federal Reserve that interest rates would remain at near-zero through 2014 have created a ripe environment for hedge funds that bet on commodity plays.
To read more about IER’s analysis of gasoline price trends, click here.