Boycott Watch
May 24, 2004
Gasoline and Taxes: Send a Message
Summary: How much of your gas expense goes to taxes?
    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 ( 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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