|Senator Demands Gasoline Price Probe|
With gasoline price soaring nationwide and hovering near $2.50 per gallon in her home state, California's Democratic Senator Barbara Boxer has called for an immediate federal investigation of oil refiners. [What determines the price of gasoline?]
In a letter to Comptroller General David M. Walker, Sen. Boxer asked the General Accounting Office (GAO) the investigative arm of Congress to investigate news reports that refiners are manipulating gasoline prices by taking more plants than usual out of service for "routine maintenance."
"I am extremely concerned about the rising gasoline prices in the state of California," Boxer wrote, "and I call on you to investigate this situation, particularly with regard to the possible manipulation of supply due to idle refineries."
Senator Boxer said, "This is reminiscent of the (California) electricity crisis when generators took their plants off-line for 'routine maintenance' at a rate higher than normal. We now know that these generators were holding back electricity to artificially increase the price of electricity."
Stating that prices averaging more than $2 gallon were compounding the current economic downturn, Boxer asked Walker and the GAO to act quickly. "Given the urgency of this crisis," she wrote, "I call on you to investigate this immediately. My past experience shows that the investigation itself will result in lower gasoline prices."
Senator Boxer also wrote to the heads of the seven largest oil refining companies in California, asking for information on the number of hours that their refineries were off-line from November 2002 through February 2003 compared to the same period a year earlier.
According to the US Department of Energy, gasoline prices nationwide are up by an average of 54.2 cents per gallon over March 2002, and up by an average of 68.1 cents per gallon in California.
What makes up the price of gasoline?
According to the Energy Information Administration (EIA), the cost to produce and deliver gasoline to consumers includes;
- the cost of crude oil to refiners,
- refinery processing costs,
- marketing and distribution costs, and, finally,
- the retail station costs and taxes.
The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors, and retail station owners.
In 2000, when the price of crude oil averaged $28.23 per barrel, crude oil accounted for about 46% of the cost of a gallon of regular grade gasoline. In comparison, the average price for crude oil in 1999 was $17.51 per barrel, and it composed 37% of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions. Seasonal supply and demand, along with fluctuations in the price of crude oil (especially imported oil) are the main reasons gasoline prices change over time.
At current prices of over $30 per barrel, crude oil currently accounts for almost 50% of the cost of a gallon of gasoline.
Taxes take their share
Taxes (not including county and local taxes) account for approximately 28 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 20 cents per gallon. Also, some States levy additional State sales taxes, some of which are applied to the Federal and State excise taxes. Additional local county and city taxes can also have a significant impact on the price of gasoline.
Getting current fuel prices
Some sources of current nationwide and regional gasoline and diesel prices include: