HOUSTON — Gas depends on factors far beyond America’s borders. So, what really goes into the price you’re paying at the pump?
We’re all feeling the pain at the pump.
When asking drivers to break down the price of gas, no one seems to know exactly how it works. We heard responses such as “the supply and demand” to “taxes” and even “Inflation and war.”
To get a clear answer, we talked to Robert Sinclair. He’s the Senior Manager of Public Affairs at AAA. He said one factor eats up most of the cost.
“Without a doubt, it's crude oil and crude oil is a globally priced commodity," he said.
Sinclair points to four main contributors to the price of gas: taxes, distribution and marketing and refining play key roles. Roughly 2/3 of what we pay is based on the price of crude oil and it’s up 70% from last year.
American oil companies lead the world in crude production but we still consume more than we make. Saudi Arabia is the second-largest producer and Russia is a very close third.
"Russia was and is a major producer,” Sinclair said. “You take 10% off the market ... suddenly everybody is scrambling with that higher value, higher price."
Refining costs are the next main contributor and that’s why gas is cheaper in the south. We have more refineries.
There is a federal excise tax of just over 18 cents per gallon and each state has its own tax. In Texas, it’s 20 cents a gallon.
No matter where you’re driving right now, it hurts.