Gasoline Prices

Gasoline, one of the main products refined from crude oil, accounts for just about 17 percent of the energy consumed in the United States. The primary use for gasoline is in automobiles and light trucks. Gasoline also fuels boats, recreational vehicles, and various farms and other equipment. While gasoline is produced year-round, extra volumes are made in time for the summer driving season. Gasoline is delivered from oil refineries mainly through pipelines to a massive distribution chain serving 167,000 retail gasoline stations throughout the United States. There are three main grades of gasoline: regular, mid-grade, and premium. Each grade has a different octane level. Price levels vary by grade, but the price differential between grades is generally constant.

The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and some- times losses) of refiners, marketers, distributors, and retail station owners. Although price levels vary over time, Energy Information Administration (EIA) data indicate that average retail gasoline prices tend to typically be higher in certain States or regions than in others. Aside from taxes, there are other factors that contribute to regional and even local differences in gasoline prices. The first would be the proximity of the supply. Areas farthest from the Gulf Coast tend to have higher prices since this area is the source of nearly half of the gasoline produced in the U.S. and a major supplier to the rest of the country. When there is a supply disruption which could be unplanned refinery maintenance or if the transportation system can't support the flow of surplus supplies from one region to another, prices will remain comparatively high. There is also competition in the market. Consumers in remote locations may face a trade-off between higher local prices and the inconvenience of driving some distance for cheaper gas. One of the biggest reasons for higher gas prices are for environmental reasons. Some areas in the country are required to use special gasolines. Environmental programs, aimed at reducing carbon monoxide, smog, and air toxics, include the Federal and/or State-required oxygenated, reformulated, and low-volatility (evaporates more slowly) gasolines. The reformulated gasolines required in some urban areas and in California cost more to produce than conventional