The recent rise in gasoline prices
has many people upset, and assigning blame for the price increase is a hot
topic. Before the recent rise in prices, however, about 1/3rd of the cost of
gasoline, depending on which state you live in, went to state and federal
per-gallon taxes. On top of that, some counties have additional gasoline taxes.
The American Petroleum Institute (www.api.org) is a
Washington, D.C. based industry association which publishes information for
consumers. According to the API, the nationwide average tax on gasoline was
42.7 cents per gallon as of January 2004. In addition to these taxes, special
formulations mandated by the Environmental Protection Agency can add as much as
20 cents per gallon to the price at the pump at today's prices depending on
where you live.
California, for example, operates its
own reformulated gasoline program with more stringent requirements than
Federally-mandated clean gasoline, thus pushing gasoline prices to the highest
rate in the nation.
The Chicago-Milwaukee area also
uses a reformulated gasoline that is unique because of its high level of
ethanol as opposed to MTBE which is used elsewhere. The problem in that region
is that not many refineries can produce ethanol based gasoline, leaving few
suppliers being able to provide gasoline to that region, making the area
susceptible to price spikes if regional pipeline or refinery problems occur.
Other costs:
Besides
environmental programs, price differences also exist depending on how far an
area is from the Gulf Coast which is the source of nearly half of the gasoline
produced in the United States. Pipeline and distribution systems maintenance
may also cause flow and distribution problems that can add to the price at the
pump. Competition is another factor - you may see multiple brands available,
but you may actually be purchasing all of your gasoline from one or two
distributors. Last but not least, the cost of living in an area may affect the
final gas price since rent, salary and other costs vary from region to region.
One factor in gasoline prices can change if consumers
take a stance - gas tax rates. At today's prices, as must as 25% of the
gasoline price is tax. As a result, after all taxes, your gasoline expense is
likely to be more than 50% of pre-tax salary. What is your opinion?
Click here to take
the Boycott Watch gasoline price survey and let us know.
To find out how much you pay in taxes,
Click Here to see the API State-By-State report. |
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