Let's see how it works?
Breakdown of Gas Prices
When you pump $20 dollars into your tank, that money is broken up into little pieces that get distributed among several entities. Gas is just like any other consumer product: There's a supply chain and several groups who are responsible for setting the price of the product. The media can sometimes lead you to believe that the price of gas is based solely on the price of crude oil, but there are actually many factors that determine what you pay at the pump. No matter how expensive gas becomes, all of these entities have to get their slice of the pie.
Let's look at where your money goes when you pay for gas:
· Crude oil - The biggest portion of the cost of gas -- as of April 2007, that's about 50 percent -- goes to the crude-oil suppliers. This is determined by the world's oil-exporting nations, particularly the Organization of the Petroleum Exporting Countries (OPEC), which you will learn more about in the next section. The amount of crude oil these countries produce determines the price of a barrel of oil. Crude-oil prices averaged around $37 per barrel (1 barrel = 42 gallons or 159.6 L) in 2004 (Source: U.S. DOE). And, after Hurricane Katrina, some prices were almost double that. In May 2007, crude-oil prices averaged around $60 per barrel (1 barrel = 45 gallons or 159.6 L).
Sometimes, gas prices go up even though there is plenty of crude oil on the market. It depends on what kind of oil it is. Oil can be classified as heavy or light, and as sweet or sour (no one actually tastes the oil, that's just what they call it). Light, sweet crude is easier and cheaper to refine, but supplies have been running low. There's plenty of heavy, sour crude available in the world, but refineries, particularly those in the U.S., have to undergo costly retooling to handle it.
· Refining costs - The refining of crude oil makes up about 28 percent of the price of gasoline. To learn more about oil refining, read How Oil Refining Works.
· Distribution and marketing - Crude oil is transported to refineries, and gasoline is shipped from the refineries to distribution points and then to gas stations. The price of transportation is passed along to the consumer. Marketing the brand of the oil company is also added into the cost of the gasoline you buy. Together, these two factors account for about 8 percent of the price of gasoline.
· Taxes - Taxes, including federal and local, account for about 14 percent of the total price of gas in the United States. Federal excise taxes are 18.4 cents per gallon, and state excise taxes average 18.2 cents per gallon. There may also be some additional taxes, such as applicable state sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Add that to the state excise taxes, and it can average 27.4 cents. It could be worse. In Europe, gas prices are far higher than in America because taxes on gas are much higher. For example, gas prices in England have risen as high as $6.65 per gallon, with 78 percent of that going to taxes.
· Station markup - While it isn't represented in the diagram above, of course some of the actual money you spend at the pump does go to the service station. Service stations add on a few cents per gallon. There's no set standard for how much gas stations add on to the price. Some may add just a couple of cents, while others may add as much as a dime or more. However, some states have markup laws prohibiting stations from charging less than a certain percentage over invoice from the wholesaler. These laws are designed to protect small, individually-owned gas stations from being driven out of business by large chains who can afford to slash prices at select locations.
Gas prices also vary from state to state for several reasons. Taxes are probably the biggest factor in the different prices around the country. Additionally, competition among local gas stations can drive prices down. Distance from the oil refineries can also affect prices -- stations closer to the Gulf of Mexico, where many oil refineries are located, have lower gas prices due to lower transportation costs. There are also some regional factors that can affect prices.
World events, wars and weather can also raise prices. Anything that affects any part of the process, from the moment the oil is drilled, through refining and distribution to your car will result in a change in price. Military conflicts in parts of the world with lots of oil supplies can make it difficult for oil companies to drill and ship crude oil. Hurricanes have damaged offshore drilling platforms, coastal refineries and shipping ports that receive oil tankers. If a tanker itself is lost or damaged, or leaks its oil into the ocean, that will put a dent in the market as well.
The most recent surge in gas prices is due to several factors, including all of those listed above. However, a new reason emerged during the spring of 2007: legislation out of Washington to incorporate more ethanol into transportation fuels. There has been a call for enough increase in ethanol production to reduce daily oil imports by 1.5 million barrels by 2017. As the ethanol production increased refineries couldn't keep up the demand and had to import more oil. This added to the increase in price.
Unfortunately, the rise in prices may not be over. Several things could happen to keep driving up the price of gasoline: continuing tensions over Iran's nuclear talks, worse conditions in Nigeria or another active and devastating hurricane season [Source: The Washington Times].
ROSLYN HEIGHTS, NEW YORK -- November 18, 2011 at 1:48 in the afternoon I stopped at EXXON MOBIL on 225 Willis Ave Roslyn Heights NY (dealer: **) for gas. I went inside the store and informed the cashier that I want 35.00 of gas on pump five I paid and signed the receipt. I began to pump the gas when the pumped stop at 30.95 I returned to the cashier and to informed him of the difference when he claimed “that he had already voided out the previous transaction and asked me to swipe my credit card again for the new charges of 30.95.” I asked him twice for verification of the voided transaction in amount of 35.00 but he was unproductive with my request and refused to reply.
I immediately called my credit card company before signing the second receipt and was informed that there was no record of a voided transaction in the amount of 35.00 but that there were two charges from EXXON MOBIL in the amount of 35.00 and 30.95 pending. I informed the credit card representative to void out the 35.00 charge, and she asked to speak with the cashier at EXXON for verification to complete the void process, which he did. I should not be subject to this type of mismanagement of my money or time. Customer need to have a sense of value by the merchandise and that integrity should be the modeled of the organization and his/her employees.
This incident could have been avoided by keeping focused on relevant policy issues. No cashier should lie or negate to provide the necessary paperwork for a voided transaction. He was attempting to steal money from me by not voiding the previous transaction. Consumers should have a sense of loyalty and trust from the retailers that we do business with. The cashier did not have a name tag on but the SHIFT # is **. I am requesting compensation of 200.00 gas card for the infraction of the rules.
Went to get gas at a Mobil station last Sunday. Only had about 80 dollars in my checking account so I put $20 in. Come to find out that the station held $91 of my money until the $20 cleared. Needless to say I paid for parking and a few other things thinking that I still had about 60-65 dollars in my account. The amounts were small ranging from $1 to $6 dollars. Well all of these small amounts didn't clear and I was charged a fee to the tune of 30 dollars a piece.
What gives Mobil the right to hold 91 dollars when I only purchased 20 dollars worth of product. There was nothing stating this anywhere and no way I could have possibly known this was happening. What gives them the right to do this to unknowing customers. What recourse do I have to get my over draft fees back. Thank you.
GREENSBORO, NORTH CAROLINA -- I have two Exxon gift cards. I swiped one card at the gas tank. The tank said to check with an attendant. As soon as I entered the store, the cashier looked at me with disgust on her face and refused to assist me with the balance on my card. Now I don't know if she was able to or not. But she was extremely rude in her response to refusing to help me out. She wouldn't even allow me to finish what I had to say. It was like she already had her mind made up before I walked in the store.
So I asked why did she have an bad attitude with the customer (myself) seeking help. She began to raise her voice and continued stating that she cannot help me. So I decided to walk away instead of arguing. As I walked out I informed her that I would be complaining. She encouraged me to call and make a complaint and provided me with the # to complain. She was very arrogant and wrong. I have never been in a situation as such, so this particular incident ruined my entire day emotionally and psychologically. And I was never able to use my card because the only person that could help me refused with a bad attitude.
Exxon Mobil credit card, from Mastercard. If you use this card, there is a good chance your card will be denied when you're outside in the winter, cold, and miles away from the next gas station. This happened to me. When I called customer service, I got transferred to the Philippines and India. When I asked to talk to the supervisor, they were very rude to me. They cut me off and wouldn't let me finish talking. They were condescending. Their English was impossible to understand. They tried to say that my English was bad (even though I'm an English teacher born and raised in the US). They said my phone wasn't working - even though no one else has that problem.
Very, very very rude customer service. They also make you stay on hold for literally hours. Just to do simple things, I've been on the phone over 2 hours on hold. And they often just hang up on you when you ask for their employee ID #.
AUSTIN, TEXAS -- Exxon today refused to sell me alcohol with my government issued residence card, stating that it's "company policy" not to accept residence cards as a valid proof of age. Considering that state law states that this is a perfectly valid form of identification. This company policy causes me to bring the ethics and morals of Exxon into question. This seems like just another form of racial profiling and discrimination.
Texas state law on this topic can be found here: **. It states the following: Texas state law does not require that a person over 21 provide any identification to purchase alcohol in Texas. There is nothing in the law that declares specific forms of ID as “valid” for an alcohol purchase.
However, a person who sells a minor an alcoholic beverage does NOT commit an offense if the minor falsely represents himself to be 21 years old or older by displaying an apparently valid proof of identification that: contains a physical description and photograph consistent with the minor's appearance; purports to establish that the minor is 21 years of age or older; and was issued by a governmental agency. The proof of identification may include a driver's license.
AUSTIN, TEXAS -- My 5'10" girlfriend, age 45, went to buy one can of beer... clerk demanded ID, but because her driver's license was expired refused to accept it (I was driving and I'm 60)... So, I go into store to buy the one can of beer and clerk says she can't sell it to me because now I'm just buying it for my girlfriend. Next day I call manager of store (**) and he says it's company policy and refuses to give any info on clerk or territory manager, but gives the "800 customer blow-off number" for me to get the number for the territory manager (because it's against policy for him to give the number to me).
I call the number, and **, ID# ** informs me that she cannot give me any number of management to call, but that she can "file" a complaint (like it would matter to them anyway). She also informed me that the clerk was following company policy!!!! Apparently no matter how old you are, Exxon policy assumes that their clerks are morons who can't act appropriately or reasonably for someone who obviously is over 21 and demands they annoy grown adults for a "current" ID. This is plain STUPIDITY!!!!!
LACEY, WASHINGTON -- Back when gasoline was costing us nearly four dollars a gallon, I told people the oil companies were ripping us off, and people said I was nuts. I told them that they had short memories because they could not remember the year before, when they were charging high prices, and people and states charged them with gouging the public. They protested to the government that they were not gouging, that their profit margin was so low, they were barely scraping by. Then, at the end of the fiscal year, they were trumpeting how they had made record profits, referred to by one oil company executive as obscene profits.
Now they have done the same thing once more, having found they can get away with it. We were paying around $4.00 a gallon for gas, and similar prices for other petroleum products. Heating oil went sky high, as did diesel fuel, jet fuel, and kerosene. Grocery prices went sky high high, because it took fuel in so many stages etc. Well, at the end of January, the oil companies dropped the other shoe. They were bragging in segments on CNN and Headline News that they had made record profits. They made those record profits by gouging everyone who used any kind of fuel.
Come on, Obama, you are making all this big talk, take these oil companies to the woodshed and give them the paddling they so richly deserve. They steal from the public and the government, then sit there with a sheepish grin and lie like a wet rug. Why haven't the oil companies been charged under the RICO laws for theft and perjury?
SUNRISE, FLORIDA -- My son purchased $20.00 dollars worth of fuel at the pump with his visa card. No problem right. Thousands of consumers do it every hour of every day. Later he uses his card at another shop and is told the funds are not available and his charge was rejected (visa debit card ). He called visa to find out what was up because he knew there was more than enough funds to cover his charges. Believe it or not he was told by the agent that when you pay at the pump the oil company immediately takes the amount of the purchase and then puts a hold on another $75.00 of his funds making it inaccessible to him for five days.
When asked why this was the visa agent told him he had no clue but knew it was a standard practice of all oil companies for pay at the pump services. His advice was never pay at the pump. GO INSIDE TO THE CASHIER!!!
MORGATOWN, WEST VIRGINIA -- I pumped gas at an Exxon in Morgantown, WV on 11/09/07 for $42. I got home and received a call that I needed to verify purchases made on my MasterCard debit account. In reviewing my account, I found an extra $76 taken from my account by this Exxon station, leaving me with only $16 on my account. It is now 11/11/07 and I still do not have this excessive charge re-applied to my account. The reason for this is most likely due to the high prices of gas and drive-offs at the pump. There was no notice of this additional, temporary credit charge being made on my account at the pump.
I've effectively paid $118 for $42 in gas from Exxon. Holding my money for days before returning it to me, re-crediting my account. In the mean time, I am left with $16 on my account while I wait for this to be refunded. I have one handicapped child, one handicapped infant and my handicapped wife at home. I needed to get prescriptions for myself today and cannot go and pick them up due to the lack of funds on my account through no fault of my. Except for bad judgment of purchasing gas from Exxon.
They got their money for the fuel paid instantly, where the hell is my deposit money or whatever they want to call it.
How can a billion-dollar industry company devise a protection method for themselves at the total cost of the consumer like this? How can they possibly justify this? I WILL NEVER VISIT AN EXXON FILLING STATION EVER AGAIN AND URGE YOU TO DO THE SAME!