How Our Gas is Used
As Americans, we are accustomed to the mobility that comes with owning a car. Gasoline helps power the American dream, giving us the freedom to travel where we want and when we want, for work, school, and for recreation. A steady supply of affordable clean-burning gasoline is central to our economic well-being and our way of life. Gasoline is as important as electricity for lighting, milk in the refrigerator or natural gas or heating oil for warmth in winter. Oil provides about forty percent of the energy Americans consume and ninety-seven percent of our transportation fuels. Because gasoline is central to our economy and our way of life, consumers are understandably concerned about the price of filling their vehicles' tanks. Although higher prices are compared with the prices in recent years, they remain well below historical highs when inflation is taken into account - and gasoline remains a good value.
The major components of retail gasoline prices consist of the cost of crude oil to refiners, federal and state taxes, and the cost to manufacture, distribute, and market the gasoline.
The cost of gasoline has gone up primarily because refiners are paying considerably more for crude oil, the principal cost component of a gallon of gasoline, and because gasoline markets are tight. Crude oil is bought and sold on the international market place and is subject the forces of supply and demand worldwide. Supplies of crude oil are restricted by OPEC and by continued political instability in oil-rich nations, while worldwide demand has continued to grow, especially in Asia, where China's crude oil imports grew thirty-six percent last year. We imports sixty-two percent of the crude oil we consume, so American oil companies pay the world price.
Taxes are another important component. Federal and state...