The price of gasoline is determined by several key factors that influence supply and demand dynamics:
- Crude oil prices - The cost of crude is the largest factor, accounting for over 50% of gasoline prices. Crude prices are set on the global market and fluctuate significantly.
- Refining costs - The expense of operating refineries that produce gasoline from crude oil also impacts retail prices.
- Distribution & marketing margins - Shipping via pipelines and barges along with retail operating costs add additional costs before reaching the pumps.
- Taxes - State and federal taxes can range from anywhere between 20 to 60 cents per gallon, differing across regions.
The variation in taxes per gallon among states, along with additional costs added by local retail chains leads to a difference in gasoline prices across different states. Generally the West Coast and more rural states see higher prices due to supply logistics and offsetting lower population density. The fluctuations in the global crude price market however impacts the core price component uniformly, leading to national price trends over time.
2002 Gas Prices
Gasoline prices over the upcoming three-day weekend should be 39 cents less per gallon than they were last Memorial Day.
What's more, the California Energy Commission reports that supplies in California are plentiful, with inventories of gasoline at refineries exceeding last year's stockpiles by almost 16 percent.
"California refineries have averaged more than a million barrels of gasoline a day for the past eight weeks," said Steve Larson Energy Commission Executive Director. "That's as much as nine percent above last year's production figures, helping to make fuel plentiful and less expensive this holiday weekend."
Regular gasoline in California averages $1.56 for the week ending May 20, 2002. Nationally, regular gasoline averages $1.40 per gallon.
Memorial Day traditionally signals the start of the summer driving season when motorists hit the nation's highways in large numbers, usually causing gasoline demand to increase and prices to jump.
"This year, however, retail gasoline prices rose earlier, in response to worldwide increases in the price of crude oil," said Larson. "Prices have inched down a total of six cents over the past six weeks, dropping from this year's high of $1.62 a gallon."
Despite this weekend's rosy outlook, gasoline prices are well above the record low Statewide average of $1.10 a gallon that occurred at the end of 2001. With that in mind, the California Energy Commission offered three suggestions for travelers hoping to get the most out of their gasoline dollars this weekend:
Where possible, shop around for the best prices. Stations across the street from each other can vary in price by 20 cents a gallon or more, and stations near the freeway are often the most expensive. Since all gasoline sold in California meets strict fuel standards, it's likely that your vehicle will do well on any brand. When you buy the least expensive fuel, you are encouraging stations to lower their prices -- and rewarding those station owners who do.
Fill up with regular unleaded gasoline. Approximately 80 percent of today's cars and trucks run fine on regular. Check your owner's manual to see if yours is one of them. By using regular instead of mid-grade or premium, you can save substantial amounts; according to last week's average retail prices in California, premium was selling for 23 cents more per gallon than regular!
Slow down. Fuel economy decreases as speeds go up. You can figure that your vehicle loses roughly one percent in fuel economy for every mile per hour that you drive above 55 miles per hour. That means a car that averages 30 miles per gallon at 55 mph could typically get 28.5 mph at 60 mph, 27 m.p.g. at 65 mph, and 25.5 mph at 70 mph. (Remember that the drop in fuel economy will probably vary for different models and ages of vehicles.)