NCPA - National Center for Policy Analysis

The Cost Components Of A Gallon Of Gasoline

September 15, 2000

As the price of a barrel of OPEC's crude oil rises, American motorists are taking greater interest in the tax components of a gallon of gas -- indeed all the components.

Here is a breakdown of the various cost factors involved:

  • On a $1.55 gallon of gas, motorists pay 68 cents, or 44 percent of the price, for the oil itself.
  • Taxes comprise 42 cents or 27 percent of the cost, distribution accounts for 25 cents or 16 percent, and refining charges amount to 20 cents or 13 percent.
  • The federal government is responsible for 18.4 cents of the tax category -- with state taxes averaging roughly 23 cents, and local authorities collecting some 2 cents.
  • All told, Americans spend about $53 billion a year in federal and state gas taxes.

In areas of the country where the Environmental Protection Agency requires gas to be reformulated, motorist must pay an additional 5 cents to 8 cents a gallon.

Analysts say that high oil prices will cost the average family of four over $1,300, decrease consumer spending by nearly $80 billion, and cost almost 500,000 jobs. And higher prices, combined with slower economic growth, will reduced federal tax revenues by $12.4 billion over the next three years.

Source: Angela Antonelli and D. Mark Wilson (Heritage Foundation), "Gassed and Going Up," Washington Times, September 15, 2000.


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