Understanding the Components of U.S. Gasoline Prices and Stagnant Federal Gas Tax
The price of a gallon of gasoline in the U.S. is composed of four main factors: crude oil (approximately 50%), refining costs (around 17%), distribution and marketing (about 17%), and taxes (roughly 16%). Crude oil prices, determined by a global market, are the most volatile component and typically drive price fluctuations. The federal gas tax, currently 18.4 cents per gallon, has not been raised since October 1, 1993, meaning it has lost significant purchasing power due to inflation over more than 30 years. Similarly, Wisconsin's state gas tax has been frozen since 2006, when indexing to the Consumer Price Index (CPI) was eliminated. Gas stations themselves typically have thin margins on fuel sales, making most of their profit from convenience store items.