The Price of Gasoline What do you pay for when you buy a gallon of gas? Most people complain about the high cost of gasoline, but few understand how the price is calculated. Many people think this cost is just for gas, but many other factors determine what you pay at the pump. Gasoline is a mixture of lighter liquid hydrocarbons and is used primarily as a fuel for internal combustion engines (Microsoft Encarta, 2005). . Crude oil accounts for nearly 17 percent of the energy consumed in the United States. Gasoline is one of the main products derived from crude oil in the United States. Gasoline is primarily used in automobiles and light trucks. The fuel is produced year-round and is delivered from oil refineries through pipelines to a massive distribution chain serving 167,000 retail stations across the United States (“EIA Brochures,” 2004). The prices consumers pay at the pump reflect the cost of producing and delivering gasoline to consumers. Included are the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally retail station costs and taxes. About 27 percent of the cost of a gallon of gasoline comes from federal, state and local taxes. Another 14 percent is a combination of distribution, marketing and retailer costs and profits. Refining costs and profits represent about 15 percent of the retail price of gasoline. This share varies from region to region due to the different formulations required in different parts of the country (“EIA Brochures”, 2004). The average retail price of gasoline tends to be higher in some states or regions than others. According to the Energy Information Administration (EIA), other factors contribute to regional and local differences in gasoline prices besides taxes. Special species are required in certain regions of the country. Environmental programs, aimed at reducing carbon monoxide, smog and air toxins, require reformulated oxygenated gasoline with low volatility (evaporates more slowly), the price of which is much higher ("EIA Brochures", 2004). Proximity to refineries Crude oil supplies can be a factor, as can shipping costs from the refinery to market. Additionally, areas furthest from the Gulf Coast are the source of nearly half of the gasoline produced in the United States, and middle of paper ......or that goes into that price. Whether it's taxes imposed by the federal and/or local government, the amount of competition in the area, the area's proximity to a reliable supply of gasoline, or even fuel regulations of emissions. The price of the fuel we purchase is carefully calculated and is subject to many variables. Informed consumers should understand these factors and keep them in mind every time they fill their tank. Reference California Energy Commission, Media and public communications office, (1994-2008), page updated 03/17/2007 Retrieved 05/19/2007 from http: ///www.energy.ca.gov/gasoline_q- and-a.htmlEnergy Information Administration, (2003) California Gasoline Price Study: Preliminary Findings, retrieved 4/5/2007 from http://www.eia.doe.gov/pub/oil_gas/petroleum /feature_articles/2003/cagasoline/cagasoline.pdfSpecialized Information Services, A primer on gasolin price, publication number DOE/EIA-X040, (published June 2007), retrieved 04/5/2007 from Http://www. eia.doe.gov/neic/brochure/oil_gas/primer/primer.htmSpeir, Robert A, Survey of the rise in