And as a percentage of the price goes DOWN. To the $2.38 a gallon base price as it hits the US, you have to add distribution costs and taxes. The average State and federal tax on Gasoline is 42 cents a gallon. Thus Gasoline is at $2.80 a gallon BEFORE WE EVEN TALK ABOUT DISTRIBUTION COSTS and that is TODAY when Gasoline is selling is my home town of Johnstown Pa at 3.05 per gallon (i.e. Distribution costs is about 25 cents per gallon).
Gasoline Tax by State:
http://www.energy.ca.gov/gasoline/statistics/gas_taxes_by_state_2002.htmlThe $100 a barrel oil MUST be refined and then distributed. Distribution varies depending on where you live. I remember traveling from Louisiana to Pittsburgh a few years ago, and watch the price of Gasoline goes up as we moved. The reason is most Gasoline moves up the Ohio on Barges, and then distributed locally by truck. Thus Louisiana have the lowest distribution costs, and Pittsburgh the highest. This is true of the rest of the Nation, the further from the importation points (New Jersey, New Orleans and Southern California) the higher the distribution costs.
Refining is just a one time event, thus unlike distribution you do NOT see a cost difference depending on where you live. It looks like 38 Cents a Gallon (via a State of California site).
Thus we can assume the following costs will stay the same, Taxes at 42 cents per gallon, distribution costs of about 25 cents per gallon (Varies on location) and Refining costs at 38 cents a gallon. Thus $1.05 of every gallon involves costs incurred AFTER the oil hits the US. At 100 a Barrel, the price per gallon of oil is only $2.38 a gallon. Add $1.05 to $2.38 you get $3.43 per gallon.
Please note the above is a rough calculation and ONLY good when the $100 a barrel oil hits the US AND no cheaper oil is coming behind it (i.e. a drop in the price of oil, unlikely but possible).
After I did the above, I found California did it first, here is the site:http://www.energy.ca.gov/gasoline/margins/index.htmlI did notice in the California site that the "Distribution costs" varies on the month, from 10 cents a gallon in September to 3 cents in November. Given that California still produces some oil AND has terminals close by, 10 cents is NOT unreasonable.