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Market Price
Like other products traded on stock exchanges, the price of a barrel of crude oil is determined on the global market.
Crude oil makes up the bulk of U.S. gasoline prices. In the first quarter of 2008, the cost of a barrel of crude oil represented 70 percent of the cost of gasoline. The other 30 percent included federal and state taxes, as well as the costs associated with refining and retailing the product.
By The Gallon
Average Gas Components for 2008 - Source: EIA
Political instability, weather and the difficulty of access to supply all affect the global price of crude oil. Even the U.S. dollar’s value plays a part in determining market price. Because oil is sold in U.S. dollars (PDF, 35 KB) - opens in new window throughout much of the world, when the U.S. dollar becomes weaker, it takes more U.S. dollars to buy the same amount of oil. Therefore the price of oil goes up for American companies and consumers.
Despite any price increases, oil is still relatively cheap compared to other day-to-day goods - opens in new window. Consider the recent price per gallon of other items: coffee is about $32 per gallon; shampoo is nearly $40, orange juice is more than $7 and milk is about $4.
View a larger version of the chart (JPG, 111 KB) - opens in new window.
From a Shell Executive
To hear the president of Shell Oil Company explain what goes into the price of oil and gasoline to Robin Roberts of Good Morning America, you may visit the ABC News Website and watch the video - opens in new window here.
We at Shell recognize and appreciate customers are concerned and affected by increases in the price of fuel. Shell has launched an electronic check card payment option that provides consumers with a convenient way to pay for purchases with a direct link to a checking account and savings on each gallon of fuel pumped at Shell stations.
The Shell Saver Card is a non-credit payment product issued to consumers directly from Shell. Because the card is linked to a checking account, it offers the added advantage of no impact on consumer credit scores, especially important to consumers who wish to avoid using credit. Visit the Shell Saver Card - opens in new window site to learn more about the details of the program.