DEBUNKED and EXPLAINED: No, greedy oil companies are not to blame for gas prices

Gas prices hit an average of $5 per gallon for the first time last week

• The cost of crude oil is the biggest cost component of a gallon of gas and can skew the cost
• Changes in crude oil prices have an outsized impact on final gas prices
• Other major cost areas include refining, marketing and distribution, and taxes
• Most gas stations make very little, and they don't reap windfalls when prices go up

The cost of crude

• Supply/demand imbalances can lead to major swings in the price of oil
• A variety of domestic and international factors impact oil production
• The push for green energy has thwarted progress that the U.S. was making in energy independence and increasing supply
• There is also a monetary policy component to this
• If the US and EU had been leaning into more traditional sources of energy, the supply would be closer to parity with demand than it is today

Refining

• The process that turns the crude oil into gasoline, a variety of other products and components for products. Costs depend on the time of year and geography, based on laws that require different blends for different times of year.
• Input costs of items that may also be refined with gasoline can also impact this cost.

Distribution and Marketing

• Oil needs to get from its location to the refinery.
• Once the oil is processed into gasoline, it doesn't magically appear at the gas stations, either. All of the distribution related to getting gas to you is intricate and expensive.
• Increasing energy costs end up being a double whammy for you at the pump.

Taxes

• On average, 57 cents per gallon of gasoline goes to taxes.
• This high taxation is meant in part to discourage the use of high-value fuels such as ultra-high-sulphur fuels (e.g., diesel).
• In the US, the federal tax is constant at 18.4 cents a gallon while state and local taxes vary widely.

Are the oil companies and greed to blame?

• Oil companies work to supply you with gasoline, as well as other petroleum byproducts, regardless of the broader economic situation
• The supply/demand imbalance in the availability vs. need for traditional energy sources shows up elsewhere
• Price gouging isn't what we are seeing today
• Some may say that price controls are the answer
• They are never the answer

 

https://www.theblaze.com/op-ed/roth-gas-prices-explained?mibextid=oZ3e79