Where Goes the $4.00 You Pay for a Gallon of Gasoline?

It seems any other time Jerry and I would have found it necessary to travel a lot would have been a better time than now. We are spending a fortune on fuel as we run here and there, and the subject of gasoline and diesel prices is on the lip of everyone we meet. So….I was intrigued today by this article from the Chicago Tribune that analyzes the $4.00 we plunk down for every gallon of the oily stuff we pump into our tanks.

The average price for gasoline on Long Island is at a record-setting $3.791 a gallon for regular, says the AAA. And diesel? Fuhgeddaboutit: It averaged $4.648 a gallon.

But where is all that cash going?

59.6 cents a gallon goes to state and federal taxes — of which Uncle Sam gets 18.4 cents a gallon, and the remainder goes to Uncle David in Albany; 26.2 cents a gallon pays for refining crude oil; and another 11.2 cents a gallon goes to distribution and marketing.

And, yes, except for the taxes, each of those items includes profit for the oil industry, Dougher said. Last year’s tally was about $123 billion.

But the industry, including Dougher, hastens to point out that those numbers represent a rate of return of only 8.3 cents per dollar of company revenue — a rate lower than those of the beverage, tobacco, pharmaceutical, computer, electronic and chemical industries.

According to Ray Dougher, an economist for the American Petroleum Institute, crude oil accounted for 74 cents of every dollar consumers paid for gas, which would work out to $2.765 a gallon, based on yesterday’s New York State average of $3.736 for regular. Dougher added that the rest breaks down as such:

59.6 cents a gallon goes to state and federal taxes — of which Uncle Sam gets 18.4 cents a gallon, and the remainder goes to Uncle David in Albany; 26.2 cents a gallon pays for refining crude oil; and another 11.2 cents a gallon goes to distribution and marketing.

And, yes, except for the taxes, each of those items includes profit for the oil industry, Dougher said. Last year’s tally was about $123 billion.

But the industry, including Dougher, hastens to point out that those numbers represent a rate of return of only 8.3 cents per dollar of company revenue — a rate lower than those of the beverage, tobacco, pharmaceutical, computer, electronic and chemical industries.

Those who don’t buy that argument are not alone. And they’ll be outraged again this week when Exxon Mobil, Chevron and Marathon Oil announce how much they made in the first three months of this year.

I’m not an economist, nor an oil tycoon or driller, nor a naturalist, nor a developer. I’m just a consumer whose wallet is suffering because of these prices. Can’t something be done? I ask.

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My devotional blog is here.

5 thoughts on “Where Goes the $4.00 You Pay for a Gallon of Gasoline?

  1. My husband is spending his time engrossed in the Consumer Reports, automobile magazines, and the internet – searching for the best solution (i.e., vehicle) to control our appetite for $4 plus per gallon petro. When he finally decides what’s best to buy as our energy-efficient vehicle, I hope they haven’t sold out. Seriously, we all know something must be done but I believe it is only the consumer that is concerned.

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  2. There is plenty of slimy crude here in the good old USA. The fun part is getting it out of the ground and refined so we can burn it in our vehicle of choice. There are some very vocal groups who do not what us (USA) to drill new wells, transport it or refine it. So we buy a lot of REFINED product form Mexico, Canada and the Emirates.

    Look what the idea of ethanol is doing to the price of corn. Then turn and look at what the lack of corn is affecting? The live stock markets, the milk markets, the ability to get corn for human consummation, these are all being affected by the desire for ethanol. We are told that to produce a gallon of ethanol is about the same cost as crude, and the environment is not blessed by it. But it, the environment, must endure some of the same adverse conditions.

    Mervi is waiting for a Hydrogen power vehicle!

    Mervi’s best answer.

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  3. Hello, Jay–

    I believe it is crucial that we develop other fuel sources than the ones we have now. For one thing, our national security would likely be enhanced if we were less dependent on Mid-East oil. I think we should continue drilling off Florida, and wisely, but aggressively investigate drilling methods and opportunities in Alaska.

    We probably will be forced to downsize our vehicles. We drive an SUV–a Jeep that gets 18.5 mpg. Hybrids and smaller cars are looking more and more appealing.

    At this point, we have little choice about the distances we drive. Our only considerations are to drive more slowly and/or trade for a smaller car.

    It’s actually cheaper to fly–even for two of us–than to drive when we are going any distance at all. That probably will be adjusting soon.

    Pickle, huh?

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  4. As I see things Shirley supply and demand seem to be the rule here. In order to truely change things we have to either consume less through changing our driving habits and developing other fuel sources, or produce more supply. Which means drilling.

    It seems as though we both were on the road spending our hard earned money on fuel this weekend as I wrote about the same topic.

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  5. Pingback: Today’s Gas Prices » Blog Archive » Where Goes the $4.00 You Pay for a Gallon of Gasoline?

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