It turns out that the price of the raw material, in this case crude oil, amounts to around 80% of the cost of gasoline. Simply put, if oil goes up, gasoline goes up. Are there other factors? Yes, many, such as refining, transportation, marketing, and of course taxes. But the oil companies control all those things, right? Again, no. It is more complicated than that. Many different, independent companies and factors come into play as crude oil comes from the Earth and follows a path to end up as gasoline in the fuel tank of your car. The following article goes into more detail on this.
The key point here, and the one I want to emphasize, and of which I know the most, is what goes into the price of crude oil. Oil must be found (discovered), produced, and delivered to a refinery where it is transformed into gasoline and many other important fuels and products. So it is a case of supply and demand. Economics 101. To lower the price supply must increase or demand must decrease.
First, understand that the market for oil is worldwide; everyone wants it and no one country or company controls all of it, though many might like to. The demand for oil cannot really be controlled. People all over the world find motor vehicles more efficient than walking or using animal power. They also like things like light, heat and air conditioning, to name just a few of the uses of crude oil and its products. So to have much of an effect on the price of crude oil and thus gasoline, supply becomes the key factor. It amazes me how few people understand this. We must increase the supply of crude oil if we are to lower the cost of gasoline. It really is as simple as that.
Geologists and geophysicists know how to find oil. Engineers know how to drill wells, move the oil to refineries, transform it to fuels, and deliver it to consumers. What is the problem then? The problem is anything that restricts supply. This usually means politics and governments, from local, to state to Federal (National), to international. So if you want lower gasoline prices, get involved in the politics of increasing the supply of crude oil. If you don't get involved, bite your tongue and take a back seat.
Solar energy can't replace crude oil, nor can wind, geothermal, nuclear, coal, or Obama's recent ludicrous suggestion, algae-derived bio-fuel. Educate yourselves on this subject and become active, and then vote. Don't leave this all up to politicians, because they often want what is best for them, not us.
The following article comes from ExxonMobil and in detail, breaks down in what goes into the price of gasoline. I think it is accurate and very well done. My opinion is mine alone.
Products then have to get from the manufacturing site to the retail site. When gasoline leaves the refinery, it is shipped largely via pipelines to local terminals. There, distributors load their trucks and transport the gasoline to a service station. Naturally, each step in the distribution chain includes labor, capital equipment and other expenses that must be recovered by operators. Of course, these operators must also compete to sustain their profitability while also paying taxes.
So how much does the government make on a gallon of gas?