Skyrocketing crude oil prices are the main reason prices at the pump are breaking records. Four years ago crude oil accounted for 47 percent of the price of a gallon of gas. In January it was up to 68 percent, the most recent figure available, and today's number likely would be higher. A barrel of crude produces about 42 gallons of gas, so a $1 increase in the price of crude becomes a 2.38-cent increase for a gallon of gas. A few years ago it took several weeks for a crude oil price increase to work its way down to the pump. Now it happens within a day or two. "The minute oil companies see a change in crude oil, they immediately post a price increase at wholesale," said Jim Smith, president of the Florida Petroleum Marketers. But prices at the pump reflect more than just the price of crude. Here's a breakdown:
Taxes average 51.6 cents per gallon in Florida, but vary based on local taxes.
Distribution and marketing: 11%
Most gasoline is shipped by pipeline or tanker ship to terminals, then delivered by truck to retail outlets. Marketing includes credit card fees and profits for retailers. Independents may cut prices on gasoline to bring in customers for food and other items sold at bigger profit margins. Competi-tion — what the station across the street is charging — also plays a role.
Refineries turn crude oil into gasoline, fuel oil, kerosene, jet fuel, asphalt and other products
Crude oil: 68%
The price of crude oil is affected by: • Supply and demand: Supply varies with inventory levels and disruptions in distribution, such as hurricanes, oil field and pipeline problems. When refineries switch in the spring to production of summer gasoline blends, temporary shortages may develop. Demand fluctu-ates seasonally (winter heating/summer driving) and with economic booms and slowdowns. • International politics: Prices rise when tensions rise in the Middle East or oil-producing nations talk tough or cut production. • Weak U.S. dollar: As the dollar falls, oil prices tend to rise to keep the return to foreign oil producers high. • Speculation: Commodi-ties traders betting on price increases drive up prices.