What’s in a Gallon of Gas? How Gasoline Prices Are Set

Updated November 13, 2026

When the price on the sign at your local station changes, it is rarely because of one thing. The U.S. Energy Information Administration (EIA) breaks the retail price of a gallon of gasoline into four broad parts. Understanding them makes it much easier to see why prices move the way they do.

1. Crude oil

Gasoline is made from crude oil, so the cost of crude is the biggest single part of the pump price. Crude is traded on world markets, which means events far from the United States – a production cut, a pipeline outage or a change in global demand – can show up at U.S. stations. You can follow the two main benchmarks, WTI and Brent, on our oil price today page.

2. Refining costs and profits

Refineries turn crude oil into gasoline, diesel, jet fuel and other products. The refining share of the price depends on how much it costs to run the plants and on how tight gasoline supplies are. It tends to jump when refineries shut down unexpectedly, during seasonal maintenance, or when hurricanes hit Gulf Coast refining centers. Summer-blend gasoline, which is required in warmer months to reduce smog, is also more expensive to make than winter blends.

3. Distribution and marketing

After refining, gasoline moves by pipeline, barge, rail and truck to terminals and then to stations. This part of the price covers transport, storage, the station’s own costs (rent, wages, credit-card fees) and its profit. It is a large reason prices differ between nearby towns, and between a busy highway exit and a quiet neighborhood.

4. Taxes

Every gallon carries federal, state and often local taxes. According to EIA, the federal tax on gasoline is 18.4 cents per gallon: an 18.3-cent excise tax plus a 0.1-cent fee for the Leaking Underground Storage Tank trust fund. State taxes and fees vary widely and are one of the main reasons some states are consistently more expensive than their neighbors. EIA’s weekly retail prices, which we show on this site, include all of these taxes.

Why prices differ so much by region

• Distance from refineries and pipelines. Areas close to large refining centers, such as the Gulf Coast, usually pay less than places that rely on long supply chains.
• Fuel specifications. Some states and cities require special, cleaner-burning gasoline blends. California’s rules are the strictest, and the state’s refineries are not well connected to the rest of the country, which is part of why EIA tracks California separately.
• Taxes. State and local taxes differ by tens of cents per gallon.
• Local competition. The number of stations, traffic and land costs all affect the margin a station charges.

Why the pump price lags crude oil

Stations sell fuel they bought days or weeks earlier, and wholesale contracts reset on their own schedules. That is why a sharp move in crude oil usually takes some time to reach the pump. You can see this on our oil price chart: turning points in crude are typically followed, a little later, by turning points in the weekly gasoline averages on the home page.

See the current numbers

Our home page shows this week’s U.S. and regional averages, and gas prices by state shows the closest official figure for every state. For EIA’s own breakdown of the price into these four components, see EIA: Factors affecting gasoline prices and the Gasoline and Diesel Fuel Update.