How much do oil companies make on each dollar I spend on gas?
The latest published data for the fourth quarter of 2011 shows the oil and natural gas industry earned 6.2 cents for every dollar of sales. These earnings are in line with the average of other major U.S. manufacturing industries, which earned 8.3 cents for every dollar of sales.
Like other sectors, the oil and natural gas industry strives to maintain a healthy earnings capability to remain competitive and benefit its millions of shareholders, across the country and in all walks of life. Healthy earnings also allow the industry to invest in innovative technologies that improve our environment and increase American energy production—leading the search for new technologies and energy sources that will provide a more secure tomorrow.
So what exactly are consumers paying for at the pump?
The biggest single component of retail gasoline prices is the cost of the raw material used to produce gasoline—crude oil. For the first eight months of 2011, crude oil alone made up 67 percent of pump price. Refining the crude oil into gasoline accounted for 14 percent. Excise taxes added 11 percent, and retailing accounted for 8 percent.
For example, when the price of crude oil was at $94 per barrel (2011 Jan.-Mar. average), refiners spent about $2.20 on oil needed to make one gallon of gasoline.
Taxes add an average of another 49.5 cents a gallon to the price. Of that, 18.4 cents goes to the federal government; the rest ends up in state and local government coffers. One reason gasoline prices vary by state is because taxes often do.
To learn more about the factors affect gas prices, read our gas prices primer.