Oil only accounts for half the cost of a gallon of gas. Here's where the rest comes from.
CBSN
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 and Aimee Picchi 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., the world's leading crude oil producer, specializes in pumping "light" crude, a high-quality oil that with strong global demand. However, the country's refineries are optimized to process a more viscous type of oil known as "heavy" crude, which is normally imported and then processed in the U.S. That explains why global oil prices may affect what American drivers end up paying at the pump.
Gasoline is derived from crude oil, which is extracted from the earth and brought to a refinery. The finished product is then transported to local terminals through pipelines and stored until tanker trucks come to transport it to local gas stations.
Gas stations buy fuel at the market price and decide how much to sell it for, factoring in overhead costs and target profit margins. De Haan estimates that stations earn an average of 30 to 35 cents a gallon.
U.S. motorists are likely to face higher gas prices for several weeks even if crude oil remains stable, according to GasBuddy petroleum analyst Patrick De Haan. Edited by Aimee Picchi In:
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