What Am I Actually Paying for at the Pump?

Although it seems that American consumers are shelling out more and more money every time they pull up to the gas pump, very few of us actually even know what we’re paying for.

Since it looks as if we’ll be complaining about gas prices for awhile, I figured maybe some of you would like to know just how that price is calculated.

Very few of us realize, for example, that Federal, State and local taxes make up the majority of the price we actually pay for a gallon of gas.

On an average, for every gallon of gasoline you buy, approximately 19 cents is actually lining the pockets of the Federal government. Another 21 cents head off to your state government. Additional county, local and city taxes will vary by location but also account for a significant chunk.

As the end-user of the gasoline product, we also pay for the cost of the refining of the oil as well as the profit made by the refining companies. That’s about 19% of the total retail price but will also vary by region.

On top of that, the delivery charge, the marketing and distribution costs, and finally the profits or potential losses of the owners of the retail stations account for another 9% of the total retail price.

While many of the stations are actually owned by the oil refining companies, others are independently owned. Independent stations are usually charged more for their products than the stations who are simply distribution centers.

When you stop and consider that a gallon of gas is averaging around $2.89 - according to the figures provided above, the cost of the actual product itself is really closer to $1.35. Surprisingly enough, there are still a large number of lobbyists asking for additional Federal gas taxes. When, may I ask - is enough, enough?

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