From the ground to your gas tank: breaking down the process before pain at the pump
RICHMOND, Va. (WWBT) -The pain at the pump continues with the national average sitting stagnant at $4.59 a gallon. The statewide average also remained unchanged from Saturday at $4.47.
In the Richmond area, you’re likely to pay closer to $4.45. Part of the reason gas is so expensive is all the steps it takes from the oil coming out of the ground to the time it’s made into gas and flowing into your tank. Each step influences the final price you pay.
Hitting the streets on Richmond’s southside, we asked people at gas stations their thoughts on why prices are so high with each giving different answers.
“The country is trying to drive everybody to do electric cars so either you start driving electric cars or you continue driving gas,” said one Richmond resident.
“I think it’s because of this war in Ukraine,” said another.
The war is certainly playing a part but gas prices have a lot to do with the process of how gas goes from a barrel of oil to the pumps at your local stations. Before gas becomes gas It starts as crude oil and the cost of a barrel usually determines about 60 percent of the amount you pay for a gallon of gas. Right now, oil accounts for about $2.40 of what you’re paying at gas stations.
Next, it’s the refining process which involves turning oil into gas. That’s another 18 percent of the final price you’re paying. Hurricane season will make those prices jump because most refineries are on the Gulf Coast and are vulnerable to storms.
Next comes how the gas is distributed - making up 12 percent. Trucks take gas to the stations and because of high diesel prices to power those trucks it costs more to have that gas transported. Federal and state taxes combined are the final 10 percent adding about 40 cents to what you’re paying.
Supply and demand also drive up costs. The war in Ukraine contributes to that. The lack of demand for Russian oil has caused production to slow. Other countries pulling from their reserves isn’t enough to make up for the 10 percent of Russian oil that they previously contributed to the global market.
While many people think gas prices are set by corporate gas companies that theory is false. Individual stations set their own prices as close to market competition as possible. That’s so they can bring people into their convenience store to buy items which are where gas stations make a majority of their profit.
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