Have you ever wondered why you pay what you do at the pump? While many assume the price of oil is tied only to the price of a barrel of crude, there are quite a few other factors that make up what you see on the sign at your local gas station.

When it comes to the price of a gallon of fuel, here’s what you are paying for:

  • Crude oil: Yes, the price of a barrel of crude oil is the main component. This factor is broken down by the monthly average of the refiner’s acquisition cost – essentially the average price of crude oil purchased by a refinery.
  • Refining costs and profits: This component represents the difference between the monthly average of the spot price of gasoline and the average price of crude oil at the time it is purchased by a refinery.
  • Taxes: Both states and the federal government tax gasoline. The tax component is represented by a monthly national average of federal and state taxes applied to either gasoline or diesel fuel.
  • Distribution and marketing: These costs make up the difference between the average retail price of gasoline plus the sum of the other three components.
  • Market uncertainty: We’ve seen it time and time again: Global upheavals dramatically impacting the price of gasoline. Unfortunately, this component is the most unpredictable and least understood.

One thing to note is that the second and fourth components vary depending on the time of calculation. There is generally a lag between when the spot and retail prices change. When prices increase or decrease on the spot market, retail prices will take a bit of time to adjust. So next time you are pulling into the pump and take a gander at the price, remember that a number of varied and complex components go into that single price-per-gallon.

Office Locations

Milton-Freewater Office

123 NE 3rd Ave
Milton-Freewater, OR 97862

Priest River Office

135 Cedar St
Priest River, ID 83856

Boise Office

311 N Curtis
Boise, ID 83706

Pasco Corporate Office

1015 N Oregon Ave
Pasco, WA 99301

Connell Office

627 N Columbia Industrial
Connell, WA 99326

Oroville Office

615 11th Ave
Oroville, WA 98844

Ritzville Office

1302 W First Ave
Ritzville, WA 99169

Moses Lake Area

Moses Lake, WA

Spokane Office

3727 N Tschirley Road
Spokane, WA 99216

Sunnyside Office

106 N 9th Street
Sunnyside, WA 98944

Yakima Office

1025 N 6th Ave
Yakima, WA 98902
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