- Crude oil accounts for approximately 54% of the retail price of gasoline, making it the single largest cost component.
- A $10 per barrel change in crude oil prices translates to roughly a $0.24 per gallon change at the pump.
- Retail gas prices typically lag crude oil price changes by 2 to 6 weeks, with increases passed through faster than decreases.
- The remaining 46% of gas price is split among refining (14%), distribution and marketing (15%), and taxes (17%).
01 What You Pay for in a Gallon of Gas
The EIA publishes an annual breakdown of the components that make up the retail price of a gallon of regular gasoline. For the most recent full-year data, crude oil costs dominate, but refining, distribution, and taxes each play a significant role.
EIA, "What We Pay for in a Gallon of Regular Gasoline," based on 2023 annual average retail price| Cost Component | Share of Retail Price | Amount (at $3.50/gal) |
|---|---|---|
| Crude Oil | 54% | $1.89 |
| Refining Costs & Profits | 14% | $0.49 |
| Distribution & Marketing | 15% | $0.53 |
| Federal & State Taxes | 17% | $0.60 |
The crude oil share has ranged from roughly 43% (when oil prices were low in 2020) to over 60% (when crude spiked in 2022). Taxes and distribution remain relatively stable in absolute terms, so when crude oil rises, it takes up a larger percentage of the total price.
EIA, "Short-Term Energy Outlook," historical gasoline price component data02 The Crude-to-Pump Correlation
The EIA reports a strong positive correlation between crude oil prices and retail gasoline prices. One barrel of crude oil (42 gallons) yields approximately 19 to 20 gallons of gasoline after refining, along with diesel, jet fuel, and other products.
EIA, "Oil: Crude and Petroleum Products Explained – Refining Crude Oil"As a rule of thumb, a $1 per barrel increase in crude oil prices translates to approximately a $0.024 per gallon increase in gasoline prices (roughly 1/42 of a barrel). A $10 per barrel swing therefore moves the pump price by about $0.24 per gallon.
EIA, "Gasoline Explained: Factors Affecting Gasoline Prices"; calculated from barrel-to-gallon yield ratio| Crude Oil Price ($/barrel) | Approximate Gas Price | Crude's Share of Price |
|---|---|---|
| $40 | $2.05–$2.30 | ~43% |
| $60 | $2.55–$2.80 | ~50% |
| $80 | $3.05–$3.35 | ~54% |
| $100 | $3.55–$3.90 | ~58% |
| $120 | $4.05–$4.50 | ~61% |
Estimate your vehicle's driving cost using official EPA fuel economy data.
Use the Calculator03 The Price Lag Effect
Retail gasoline prices do not respond instantly to crude oil price movements. The EIA has documented a typical lag of 2 to 6 weeks between a change in crude oil prices and the corresponding adjustment at the pump. This lag reflects the time it takes for crude to be purchased, refined, shipped, and sold at retail.
EIA, "Gasoline Explained: Factors Affecting Gasoline Prices – Price Changes"Research from the EIA and academic economists has also documented an asymmetry: gas prices tend to rise faster when crude increases than they fall when crude decreases. This pattern, sometimes called "rockets and feathers," has been observed consistently in EIA weekly price data. The EIA attributes part of this to the structure of wholesale gasoline markets and inventory management practices.
EIA, "This Week in Petroleum" analyses; EIA gasoline price asymmetry documentation04 Refining Margins and Crack Spreads
The "crack spread" is the difference between the price of refined products (gasoline, diesel) and the price of crude oil. It represents the refiner's gross margin. The EIA tracks this metric because it explains much of the variation in gas prices that is not attributable to crude oil.
EIA, "Short-Term Energy Outlook," refining margin data; EIA "Petroleum & Other Liquids: Spot Prices"The 3-2-1 crack spread (3 barrels of crude yielding 2 barrels of gasoline and 1 barrel of diesel) has averaged roughly $15 to $25 per barrel in recent years. However, it spiked above $50 per barrel in mid-2022 when refinery capacity tightened following closures during 2020. These refining margin swings can add $0.50 or more per gallon to gas prices independent of crude oil movements.
EIA, "This Week in Petroleum"; EIA refining capacity and utilization dataSeasonal refinery maintenance (turnarounds) typically occurs in spring and fall, temporarily reducing gasoline supply and contributing to the seasonal price pattern that sees higher prices in summer driving months.
EIA, "Gasoline Explained: Why Gasoline Prices Fluctuate"05 Impact on Your Annual Fuel Cost
For the average driver covering 12,000 miles per year at 26 MPG, every $10 per barrel change in crude oil moves annual fuel spending by approximately $110. The table below shows the estimated annual fuel cost at different crude oil price levels.
Calculated: 12,000 mi ÷ 26 MPG = 462 gal. $0.024/gal per $1/bbl × 462 gal × crude price change. EIA reference data.| Crude Oil Price | Est. Gas Price | Annual Fuel Cost (12K mi, 26 MPG) |
|---|---|---|
| $50/barrel | ~$2.35 | $1,085 |
| $70/barrel | ~$2.85 | $1,315 |
| $80/barrel | ~$3.15 | $1,454 |
| $100/barrel | ~$3.70 | $1,708 |
| $120/barrel | ~$4.25 | $1,962 |
Drivers of fuel-efficient vehicles are naturally less exposed to crude oil price swings. A 40 MPG vehicle at $4.25/gallon costs $1,275 per year to fuel, while a 16 MPG truck costs $3,188—a $1,913 difference that grows as crude oil prices rise.
Calculated: 12,000 ÷ 40 × $4.25 = $1,275; 12,000 ÷ 16 × $4.25 = $3,188. EPA MPG references.06 Data Sources
- EIA: "Gasoline Explained: Factors Affecting Gasoline Prices." eia.gov
- EIA: "What We Pay for in a Gallon of Regular Gasoline." eia.gov
- EIA: Short-Term Energy Outlook. eia.gov/outlooks
- EIA: Weekly Retail Gasoline and Diesel Prices. eia.gov
- EIA: Petroleum & Other Liquids Spot Prices. eia.gov/petroleum