Where All That Gas Money of Yours is Going


Published August 08, 2012

| Bankrate.com

Gas prices got your attention? You're probably asking where all the gas money you're shelling out at the pump is going.

Spring guide to fuel-efficient cars

There are a couple of ways of answering that.

Industry shows how gas price breaks down

The American Petroleum Institute, or API, has a general breakdown for you. According to the trade group's February estimates, most of what you pay for gasoline -- 71% -- goes to refineries, to buy oil.


After oil prices, the rest of the price of a gallon of gas comes from taxes (14%) and costs associated with refining, moving and selling the gasoline (15%), according to API.

At the time of API's most recent study, in late February, the national average price of regular-grade gasoline was $3.58 per gallon. By the group's estimates and percentages, about $2.54 of that price covered crude oil costs, 50 cents went to taxes, and about 54 cents went into refining, moving and retailing.

Get geeky for more exact gas cost analysis


Here's how:

   Find the price of a gallon of gas. Go online to AAA's Daily Fuel Gauge Report. For example, as of March 22, the auto club showed that a gallon of regular gasoline sold for about $3.88.


   Find the cost of taxes. The federal tax on gasoline is 18.4 cents per gallon. On top of that, there are state taxes and, depending on where you live, local gasoline and/or sales taxes, too. If taxes are typical where you are, the API estimates you're paying 49 cents per gallon in federal, state and local gas taxes, making up 12.5% of the average $3.88 gas price.

   Determine the cost of refining, transportation and retailing. The rest of the cost of gasoline goes to turning crude oil into fuel, moving it to gas stations and retail markup. Get this number by subtracting the amounts in steps 2 and 3 from the average price in step 1. In this case, that's $3.88 minus $2.51 and minus 49 cents, which comes out to 88 cents for refining, transportation and retailing -- or about 22.5%.

