Oil only accounts for half the cost of a gallon of gas. Here's where the rest comes from.
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The oil supply shock from the Iran war is directly impacting what Americans pay to fill up their cars, with gasoline prices up an average of roughly 60 cents since hostilities erupted on February 28. But just how much does the cost of oil factor into how much drivers pay to fuel up? Edited by Alain Sherter In:
The oil supply shock from the Iran war is directly impacting what Americans pay to fill up their cars, with gasoline prices up an average of roughly 60 cents since hostilities erupted on February 28. But just how much does the cost of oil factor into how much drivers pay to fuel up?
"The price of oil, which is market-determined, is the biggest, movable determiner," of gas prices, Patrick De Haan, a petroleum expert at GasBuddy, told CBS News.
The U.S. is the world's largest crude oil producer, according to the Energy Information Administration (EIA). Yet domestic gas prices are more tightly linked to the cost of Brent crude, the international benchmark, than West Texas Intermediate, the U.S. benchmark, according to the agency.
"Retail gasoline prices ultimately reflect the crude costs paid by refiners, and Gulf Coast refiners pay Brent-linked prices," Ehud Ronn, a professor at the University of Texas at Austin's business school, told CBS News in an email. "As a result, retail gasoline tends to track Brent rather than WTI."
On Friday, a barrel of Brent crude hovered around $100, up roughly 38% from $73 just before the war started, according to data from FactSet.
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