What Causes High Gas Prices?

Pumping Gas

We’re on the brink of summer, and while that means carefree days for the kids, adults who face upcoming road trips have something new to stress about—high gas prices. Warmer weather means an increase in prices as oil company execs anticipate profits from vacationing families. But is an opportunity to make money the only reason why gas prices fluctuate so much and so often? If you’ve ever wondered what goes into determining the price of gas, read on.

The Energy Information Administration says that gas prices are calculated based on a number of things, including taxes, the cost of marketing and distribution, the cost of refining crude oil, and the price of crude oil itself. Many people are already aware of the fact that the cost of crude oil is the main determining factor in calculating gas prices. However, it’s not the only factor.

Taxes are another big factor. Many oil companies face federal, state, and local taxes on the money they make off of gas. Additionally, the process of refining the oil is an expense as well, with summer blends of oil costing more to refine in order to comply with the Clean Air Act than all-season blends. Last of all, the cost of marketing and distribution speaks for itself, as that’s not an expense unique to the oil industry.

With the summer months coming up, gas prices are rising because the impending warmer weather means that oil companies need to provide customers with cleaner, more refined blends of gasoline. While paying all that extra money to fill up your car is still an unfortunate side effect, having a better understanding of high gas prices can help lessen the blow.

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