The Gas Price Roller Coaster Explored


The cost of a barrel of oil recently sunk to around $70, which is half of what it cost in July.

But that does not mean that gas prices are through terrorizing people’s wallets.

And meanwhile gas prices not only vary from state to state but often differ greatly between counties and regions. So why do some Americans pay more to fill up their vehicles in one place rather than another?

Crude Oil Prices, Taxes are Big Factors
There are several factors that influence the price of gasoline.  First, it depends on the price of crude oil, which generally makes up the largest percentage of the price. Then add in federal and state taxes, the refining costs and the cost of distribution and marketing.

The price of crude oil is generally determined by supply and demand worldwide. The price is largely influenced by the production quotas set by the 12-country energy cartel known as OPEC, which stands for the Organization of the Petroleum Exporting Countries. According to the Primer on Gasoline Prices from the Energy Information Administration (EIA), “world crude oil prices reached record levels in 2007 due mainly to high worldwide oil demand relative to supply. Other factors contributing to higher crude oil prices include political events and conflicts in some major oil producing regions, as well as other factors such as the declining value of the U.S. dollar (the currency at which crude oil is traded globally).”

Taxes at the federal, state, and local level also make up a large part of the price of gasoline. As stated in the December 2007 Petroleum Marketing Monthly from the EIA, in 2007, federal excise taxes were 18.4 cents per gallon while state excise taxes averaged 21.5 cents per gallon.  So far this decade taxes average about 24% of the retail gasoline price.

Geography Plays a Part

History has shown however, that there are certain areas where gas is always priced either higher or lower than the national average. For example, the further the gasoline has to travel to get to its location (like Hawaii) the more expensive it may be once it gets there. Also, unexpected events that may hinder gasoline production can affect its price, such as a hurricane.

Some states and counties also have special environmental regulations that can increase prices.  According to the EIA, California prices are historically high because the state’s reformulated gasoline program is one of the most intense in the country – on top of the 7.25% sales tax, 18.4 cent-per-gallon federal excise tax and an 18 cent-per-gallon state excise tax.


But, no matter where you live, there are a few ways to guarantee getting the best possible price for gas in your town. The web can help you pinpoint them. The experts at have a few tricks that may help:

Learn where to find the cheap gas
Generally, the cheapest gas can be found in the suburbs of major metro areas. Affluent areas tend to have the most expensive gas due to the higher land taxes, as do stations located near major freeway exits.

Find the right type of station
Some stations consistently have the lowest prices in their area. Many times, these stations are located at wholesale clubs, grocery stores or department stores.  These retailers sell gas close to cost or at a loss with the intention of attracting customers into the stores.

Take advantage of discounts
Some stations offer coupons on the back side of grocery store receipts, in the mail, and on the Internet. Some stations will give discounts on gas if customers also purchase a car wash, or visa versa.  Another way to save is to use gas rebate credit cards like the Chase Perfect Card (Stock Quote: JPM) which gives a 6% rebate on all gas purchases for the first 90 days, and the Discover Gas Card (Stock Quote: DFS) which gives a 5% rebate on all gas purchases.

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