Where does your money go at the gas pump?

Gas prices are slowly rising across the United States after months of a steadily declining, but who is really profiting off your gasoline purchases.

It might surprise you, but it isn’t the gas station.

An analysis of gas prices by Sageworks, a financial analysis company, shows that gas stations aren’t bringing in huge profit margins — or not the profits that consumers think.

For every $50 fuel purchase, gas station owners take home a measly $1, or a little more than 2 percent, according to the analysis by Sageworks. Visa or MasterCard make $1.25, or 2.5 percent, off every $50 gas purchase. (That’s why you see some gas stations in the Houston area offer you a discount for paying with cash.)

According to the research, crude oil accounts for 61.5 percent of the cost, or $30.75.

The rest of your money goes to refining crude oil into gasoline, $7 (14 percent); delivery $4 (8 percent); and taxes $6 (12 percent).

Graphic: Sageworks)

(Graphic: U.S. Energy Information Administration)

The U.S. Energy Information Administration puts out their own break down for gas prices, and their breakdown isn’t too far off Sageworks’ analysis.

According to the administration, a gallon of gas (at the July price of $3.42 per gallon) is broke down like this: taxes, 38 cents (11 percent, or $5.50 for a $50 purchase); distribution and marketing, 34 cents (10 percent, or $5); refining, 44 cents (13 percent, or $6.50); and crude oil $2.26 (66 percent, or $33).

Obviously, there are some slight differences between the two breakdowns, but they aren’t too far off.

So who do you blame for the high prices?

51 Comments

  1. henry

    I blame everyone. For becoming so dependent on a limited resource. For commuting to work solo in an SUV. For letting big business drive govt regulation. For whining about needing their precious horsepower. For invading countries to secure oil lines. For refusing to even acknowledge “golf carts”. I blame station owners the least.

    #1
  2. Peter

    This is why you don’t see gas stations without a convenience store. They couldn’t make it without the profits from the store.Imagine what the cost of the pumps and tanks are. At $1 per fill-up, it’s going to take a lot of traffic to pay for that equipment.

    #2
  3. yellowjournalismlives

    Brought to you by the Association of Gasoline Retailers. It is a very nice an logical set of reasons. Most other costs in producing and selling gasoline are relatively static. The price of the commodity is what changes. It might not be directly connected but the connection is there and you cant explain away the greed at the pump.

    #3
  4. Woodstoc

    They lie. Nothing more than BS propaganda. When oil drops, you don’t see stations lowering their price for weeks, however, let some sheik fart, and BOOM, the price of gas goes up immediately.

    #4
  5. eiioi

    yellowjournalismlives and Woodstoc, the source for the information is the U.S. Department of Energy. Can’t you read?

    #5
  6. Chris

    The problem with this article is the data it is based on. With the single phrase “according to the administration” the article glosses over an extremely important fact, that this data is coming from a source very few of us trust (i.e., politicians). It is politicians that appoint the people that run the U.S. Energy Administration or the U.S. Department of Energy, and those positions they are appointed to pay well. In return the appointed people do almost anything (e.g., skew data) to return the favor to the politicians that appointed them.

    Also, I find it hard to believe that refining only makes up 12 or 14% of the cost with all of the regulations the EPA has over refiners and the fact that a new refinary hasn’t been built in this country for decades because of the outright ban on building new refineries in the US.

    #6
  7. ron king

    My friends husband is paying 57 cents a gallon for diesel. She is a realtor here in Brazoria county. Somebody from the paper can email me and I will give her name and digits so they can call her. His company buys millions of gallons a year. So does the public. We are getting the shaft.

    #7
  8. Johnny

    Woodstoc, when a retailer has a large amount of inventory on hand, bought at higher prices, he must continue selling that inventory based on his cost. When prices drop, and he buys new inventory, he can lower his prices as well and still make a little profit. I know one full service station owner who quit selling gas due to the volatile prices. He makes enough on repairs and says gas is not worth the hassle.

    #8
  9. shockwave

    And who gets that money for the crude, for doing nothing but pulling it up from the ground? Those multibillion dollar PROFITS every oil company is getting show where the money is going. The cost of a barrel of crude is what the oil companies say it will be, and when the prices start to fall, they just drill less and drive supply down to force it up again.

    It’s a trust, and has been for almost a decade.

    #9
  10. SaltWaterCroc

    Hey, those oil companies need massive tax breaks to improve their massive profits. How else are they going to pay those hard working C-level execs tens of millions of dollars. And heaven forbid anyone raise taxes – that would make them run away (or some other ridiculous statement….)

    #10
  11. legaleagle

    The real unfairness of the system is that prices tend to rocket up but balloon back down. Someone is lining their pockets.

    #11
  12. Chris

    Also, even if this data is correct and crude oil makes up the majority of the price of gas, it is because of this fact: we have to import the majority of our oil. Why do we have to do this? Because of the restrictions we have imposed on ourselves from producing oil here in the US. Just look at the moratoriums and bans on exploration imposed by US Government.

    #12
  13. Gregg

    I blame the Democrats.

    #13
  14. danmcgraw

    Chris, we posted this story — http://fuelfix.com/blog/2011/08/04/u-s-becoming-less-dependent-on-oil/ — yesterday about oil imports to the U.S. While it doesn’t add to the gas price discussion, it does speak about the U.S.’s dependency on foreign oil. According to The Kansas City Star, the number — while still a majority — has been declining. I’d encourage you to read it.

    #14
  15. Chris

    Since when is it a crime to make a profit in the USA? If anyone does not like the cost of gas, stop buying it. Oil Companies are not criminals for making a profit. If we all keep blaming oil companies for making a profit, they are going to leave the US. All of the jobs will go with them. All of the taxes they pay will go with them. I will go with them.

    #15
  16. sharky

    This is a manufactured story. Notice how the actual fluctuation in price is not addressed: Why fuel- no matter how the individual breakdown coins out- changes from $2.65 to $3.65 to $4.65 and back again to and fro over a given amount of time- defying normal market dynamics and even inflation. THIS is what people are angry about. In a nutshell- finance swindlers.

    #16
  17. eiioi

    Chris, instead of nitpicking about everyone else, name me a source that you trust, you know, besides your own beliefs (see “… I find it hard to believe that…”).

    #17
  18. Chris

    Dan and eiioi,

    Thanks for the rec on the article. I just finished reading it. Something similar was in that article as in this one. Here is a quote “[p]art of the big drop [in net imports of oil] resulted from the federal agency’s using a different measurement.”

    Again, a government agency, with politically appointed people to run it, is the source of the data. I don’t trust the data.

    eiioi – see: The Prize – Daniel Yergin, The Color of Oil – Micheal Economides, et al.

    #18
  19. TruthSeeker

    So now cheap gasoline has become an entitlement?

    #19
  20. yellow journalism lives

    Yes , I can can read. Thank you. I can also see what happens in the world. We will see a 20 cent drop over three weeks or so and then when the price rises next month the increase at the pump will be 40 cents and it will be immediate. And I have people asking me if I can read!?! I read crap from the EPA, FAA, NTSB, and other govt agencies as well. I am not saying it is all crap but it doesnt just get an autopmatic stamp of approval either.

    #20
  21. Tex

    The price of a barrel has dropped to a six month low hovering on average now around $98 for a barrel yet the price of gasoline which according to your figures 66% of it comes from crude oil has only changed 1 cent within the past week. So you tell me who is to blame.

    The consumer is the one getting screwed

    #21
  22. bigfishh

    I think this is a BS sob story. The gas station owners I know all seem to be doing very well. Most are planning to build another station for their business. They would not be doing this if they were not making a profit.

    #22
  23. BOB

    Whatever ! lol !

    #23
  24. eiioi

    So Chris, you believe someone who will sell more books for being more sensational, but not necessarily for being more factually correct? Am I getting that right?
    And yet even with these alternative sources of information, I’m not seeing a quote of theirs which refutes the information above.
    Your selective quotation from Dan’s previous article is also irksome. Your quote:
    “p]art of the big drop [in net imports of oil] resulted from the federal agency’s using a different measurement”
    The full quote:
    “Part of the big drop resulted from the federal agency’s using a different measurement — net petroleum imports — WIDELY VIEWED AS A MORE ACCURATE WAY to judge overall dependence on foreign petroleum.”

    So you are actually trying to suggest that the goverment switching to a *more* accurate method makes them a *less* reliable source! PRICELESS!

    #24
  25. Winski

    This is beyond the limit on ‘how stoopid does an issue describing Houston have to be” to get bounced off the paper or web site… THIS ONE takes the cake..

    In a city who leaves, eats, breaths and bleeds oil and oil companies, you actually ask this question??

    Are you just patting yourself on the back or trying to stick a long knife into your neighbor?? Either way, you come out looking like an idiot.

    #25
  26. eiioi

    yellow journalism lives and yellowjournalismlives,
    No one is giving them an “automatic stamp”. That’s a strawman. I would like to see a better source if you have one, or at least a source of equal reliability which gives alternate numbers. I would not count these as reliable sources though:
    “I see what happens in the world”
    “I believe that…”

    And I really don’t understand what motives people are trying to attribute to the U.S. DoE anyway? Are they being paid off by the ultra-rich, fresh off the boat from Pakistan gasoline retailers? And Big Oil (profiting from the crude) is in reality not making much profit at all, and are really innocent in all this?

    Even if the information is not correct, what motivation is there to spin it in this way?

    #26
  27. aj

    #1 The store owners are building more stores because of the sells of convenience items not of gasoline, gasoline is what gives people an excuse to visit their store and buy something at a “convenient” price.

    #2 From the data provided, it shows that the oil companies have cornered the market and have become monopolies. We are dependant on gas and the companies that own the oil know this and they can charge pretty much what they want with out completely breaking us. However you notice everyone else on the chart only makes up a fraction of the total cost of production. That is because they have to compete with other companies or else they don’t get a piece of what’s left of the pie. It is a scary thought that few large companies can hold the world hostage at any moment.

    #27
  28. eiioi

    If I were to change the numbers, I would change “Taxes” to “Taxes paid by consumer” on the price of gasoline. There are income taxes on producers, refiners, and transporters, royalty payments by producers, revenue sharing with governments (by producers). I’m sure that the chart would get much more complicated, but it’d be interesting to see.

    #28
  29. eiioi

    aj,
    Regarding #2, are you suggesting that the 5,000+ oil and gas operators in the United States have formed a monopoly? Or even more companies internationally?
    From Greek, “monopoly” = one seller.
    From Webster,
    “exclusive ownership”, “exclusive possession or control”, “a commodity controlled by one party”, “one that has a monopoly”
    5000 1. 5000 is not exclusive.

    #29
  30. Chris

    eioii:

    you added “widely viewed as more accurate” to my quote. Widely viewed as more accurate by whom? The US government? Foreign governments?

    #30
  31. danmcgraw

    Chris, Eiioi is quoting from The Kansas City Star story.

    “Part of the big drop resulted from the federal agency’s using a different measurement — net petroleum imports — widely viewed as a more accurate way to judge overall dependence on foreign petroleum.”

    #31
  32. danmcgraw

    This is turning into a nice little debate.

    #32
  33. Sean

    I Blame Obama and the liberal’s that drive a prius for not paying their fair share; j/k actually I am in the Oil business so the higher the price of oil the more job security I have and the tax cuts for “big oil” that Obama is talking about is the same tax cuts every business gets including Wal-Mart and G.E. but I don’t see anyone mad at them with their profit margin even higher then “Big Oil”.

    #33
  34. Chris

    Dan,

    I knew where the language he added came from. And again I ask, who thinks the feds new measurement is “more accurate?” The Kansas City Star does not say in their article. Therefore, the article, although interesting, fails to support its conclusions. Just more anecdotes for the blind, uneducated masses that will believe anything they read.

    #34
  35. KB

    I’ll tell you who “profits”…the speculators in New York and Chicago and the government who taxes oil and every product made from it.

    #35
  36. Helen

    KB, you are right. ExxonMobil makes appx 8 cents per gallon avg on all refined products. The government makes 40-60 cents per gallon in taxes. Who do YOU think we should be asking questions of?

    #36
  37. David

    Not having to deal with the who are in charge of handling my gas transaction is worth the credit card fees:

    “Pump 3 is on sir.”
    “I need pump 4 on!”
    “You want pump 5?”
    “4!!!!”
    “Pump 7?”

    #37
  38. JustRunningScared

    So who do you blame for the high prices?
    ++++++++
    You seem to be concerned the gas station only earns a “measly” 2%. Funny that you didn’t use another adjective when you say the government takes 12%. The gas station owner does more than the government. So I blame the government for “extorting” from the taxpayer.

    #38
  39. Dave

    Chris, you’re right. For all the squawking about oil company profits, they’re not raking in money like you think. A profit of $40 Billion sounds like a lot, but when it’s on revenues of $450 Billion, it’s not even 9%. The return on investment is no better than most industries, it’s just on a larger scale. But, if everyone could do math, the lottery would fail.

    #39
  40. yellow journalism lives

    @TEX

    Amen, the retailer may not be the only guilty party as the refiners and the big oil companies seem to be making huge money as well but its hard to get me to believe that the retailer is only in it to sell beer and cigs. I dont know about most of you but I seldom shop at the place I buy gas. Anyone else notice how quick the price rises but drops at a snails pace or is EIEIO right?

    #40
  41. Brian

    I think the problem with the profits really arise with how much they are. Billions of dollars of profit per quarter is just gross, and frankly is seen as not making a profit, but gouging the customer. And the thought process then goes, well if they lowered their profits and took less money then the price of gas would go down drastically because those same profits are benefitting everyone not just Big Oil.

    #41
  42. First Ammendment

    “Actually, it might already be already happening.”…

    Alright already. I wish the prices would actually go down so this economy would flourish again. The gas prices went up and the economy tanked. Thank you Bush.

    #42
  43. Joe

    You are forgetting the traders on the NYSE. They buy oil low, and hold it until the prices go up. Look at how gas prices stay fairly stable until a holiday, then the prices shoot up! The crooks on the stock exchange make a killing on our backs!

    #43
  44. orangemen78

    I am reading some of these blogs and I have to chuckle about how many are so ignorant or just don’t know what they are writing about. The oil companies for one put back there profits into drilling and research. It cost a average of $ 4-10 million to drill 1 well. It also creates jobs which is needed. This administration has done nothing to create jobs, The taxes imposed on a gallon of gasoline does not stop there. We have a plentiful resource in natural gas that for some reason the transportation industry will not develop vehicles that use natural gas. Those of you blaming Bush need to do tour homework before you start bashing him.

    #44
  45. bferrell99

    I find the info in the article hard to believe. When you can have 25 cents or more diference between gas stations don’t tell me they are not making money.

    #45
  46. Juan

    SPECULATORS for trying to make a big profit. When will we ever learn?

    #46
  47. INXORTE

    Ok, the future markets have to do with this? Is the oil industry manipulating the futures? At the end of the day, the oil companies and their executives are making the profits and the bonuses. Can someone investigate to see if the hypothesis is correct.

    #47
  48. thekid

    wow, so many stupid posters.
    1. gas owners don’t make money on gas, they make it on everything else they sell. haven’t you dodos noticed most gas stations are huge convenience store.
    2. gas goes up fast and down slow because of price. it is hard for you liberal morons but. i have 100 gallons to sell, the cost goes up, i get my delivery that day so now i have 150 gallons to sell, i can’t tell the difference between the old gas and new gas, so i have to price it at the new price to cover the cost of the new gas.
    in reverse, gas goes down, i still have to sell the old gas at the higher prices. why would i take a loss when i only make a few pennies per gallon anyway.

    a basic economics class would do you all good. but then again, 49% of all people are of below average intelligence.

    #48
  49. Bill in Houston

    @ Joe on August 6th at 0530

    Oil and gasoline is NOT traded on the NYSE. That is the New York STOCK EXCHANGE.

    I believe you mean various mercantile exchanges.

    Also, if you want to know why prices go up before a holiday, there are two reasons. One is simple supply and demand. There is more demand, which means the gas station owner needs to buy more. The other is fungibility. The owner pays cash for his fuel and must anticipate paying MORE for that product due to the increased demand. Why can’t they (refiners) increase supply? They do, but with refining capacity over 90%, one breakdown messes up the whole system.

    There are no “crooks” making a killing. Let’s be honest. No one really wants to pay more for gas, me included. These same “crooks” drove the price down to $29 a barrel back in the end of 2008. Remember $1.50 a gallon?

    Then we had the moratorium on Gulf drilling, and the administration is still delaying issuing new drilling permits after the moritorium ended last year, which drove up prices.

    It helps when you know how the system works.

    #49
  50. TiredofHighPrices

    I find it “interesting” that when the price of a barrel of oil inches up by pennies, gas prices go up IMMEDIATELY, but when the price of oil drops drastically, we don’t see a corresponding drop in price at the pumps. Last week WTC went down to 86$ a barrel, the lowest price in many months, and I didn’t see a single station lower their gasoline prices. So don’t tell me it takes a few weeks for price changes to hit the market when gas stations raise their prices as soon as oil prices start moving up.

    #50
  51. tsujones

    you left out Golman Sacks. they are getting paid much more than we know..

    #51