International Evironment of Accounting

what determines the cost of gasoline?

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  1. Dear goodlulu-ga

    The cost of gasoline is determined by an number of factors.

    The first is the cost of crude oil to refiners. Crude oil prices are

    determined by worldwide supply and demand. Rapid gasoline price

    increases often occur in response to crude oil shortages. This

    shortage can be governed by many factors including decreased output by

    the crude oil producers, war, threat of war, gasoline producers buying

    more oil and thus creating a sellers market where prices are driven


    Refinery processing costs.

    Changes in gasoline specifications.

    Marketing and distribution costs – these vary from region to region

    and depend on the grade of the gasoline.

    Retail station costs.


    More background information can be found at

    Here is an example extracted from the Californian Energy Commission

    (the site has graphics):

    California Motor Gasoline Price Breakdown April 12, 1999

    Gasoline costing $1.62 per gallon, crude oil costing $14.75 per barrel

    9 cents – Dealer Margin includes all costs associated with the

    distribution and retailing of motor fuel.

    48.3 cents – Local and state sales tax estimated at 8.0%.

    70 cents – Refinery margin must cover all costs associated with

    production, distribution, and acquisition of gasoline. During times of

    market disturbance, production (and acquisition) costs may increase

    beyond normal values.

    35 cents – Crude oil prices fluctuate daily causing a change of about

    2.5 cents per gallon in the crude cost for gasoline for every $1.00

    per barrel change in crude oil cost.

    The 2000 figures can be compared at

    The Exxonmobil has some graphs showing crude oil and gasoline price

    fluctuations since 1920 and a discussion of their effects at

    I hope this has answered your question. Please ask for clarification

    of this research, or if the links do not work, before rating the



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