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Understanding What Determines Gas Prices

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shutterstock_222228304-300x200Crude oil prices determine around two-thirds of the price consumers pay at the pump every time they fill up and forecasts are showing the average price per barrel for Brent crude oil in 2015 to be around $68 per barrel, while West Texas Intermediate is showing $63 per barrel. However, it’s important to understand that there are many factors that could change these numbers, as industry price forecasting is not an exact science.

The U.S Energy Information Administration (EIA) notes, “Federal, state and local government taxes contribute to the retail price of gasoline. Additionally, county and city taxes may have a significant impact on the price of gas in certain locations”.  Also, “Distribution, marketing, and retail dealer costs and profits are included in the retail price of gas. Most gas is shipped from the refinery first by pipeline to terminals near consuming areas where it can be blended with other products to meet local government and market specifications”.

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