Gasoline: Its journey from the barrel to your gas tank

June 6, 2011

A barrel of crude oil contains 42 gallons of that black gold and, in theory, could easily command something like $120 on the commodities market. That translates to about $2.86 per gallon of crude oil. But, you can get only about 20 gallons of gasoline out of that barrel. The remainder goes into other lighter and heavier hydrocarbon products.

A barrel of crude oil contains 42 gallons of that black gold and, in theory, could easily command something like $120 on the commodities market. That translates to about $2.86 per gallon of crude oil. But, you can get only about 20 gallons of gasoline out of that barrel. The remainder goes into other lighter and heavier hydrocarbon products.

Let’s assume for the moment that these other products (asphalt, diesel fuel, aviation fuel, grease, and the like) will sell for the same price as gasoline. The refinery needs to add a markup, the details of which I don’t know. Let’s say it’s 20%, which jacks the per-gallon price to $3.43. Add in a bit for transportation and handling, and you get to something like maybe $3.75 per gallon.

Now the add-ons start to pile up. First is the tax that various governmental bodies levy on that gasoline. In Illinois, the state tax is $0.19 per gallon. The county in which I reside imposes its own levy of $0.06 per gallon. Now, we’re getting to the better part of $4.00 per gallon at the retail level.

However much we complain about taxation, other countries have somewhat more voracious government larders. Consider what the BBC reports about gasoline cost at the pumps.

Finally, our retail outlets need to add a markup, maybe 5 or 10 cents per gallon. It’s not surprising that gasoline can cost as much as it does. Be thankful we’re not in Europe.

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