Subject: {FIRSTNAME}, Why Are Gas Prices So High

Hello {FIRSTNAME},


I hope you enjoyed the first course on what are alternative fuels, next we are going to look at why are gas prices so high.

Here is a recap of the e-course schedule:

Part 1: What Are Alternative Fuels
Part 2: Why Are Gas Prices So High
Part 3: Alternative Fuel Vehicles	
Part 4: Gasoline and Oil	
Part 5: Environmental Damage
Part 6: Global Warming
Part 7: Alternative Fuel According to the Numbers

With that being said... Lets get rolling shall we  :)
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Part 2: Why Are Gas Prices So High

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There are three main grades of gasoline: regular, mid-grade, and premium. Each grade has a different octane level. Price levels vary by grade, but the price differential between grades is generally constant.

The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors, and retail station owners.

In 2005 the price of crude oil averaged $50.23 per barrel, and crude oil accounted for about 53 percent of the cost of a gallon of regular grade gasoline. In comparison, the average price for crude oil in 2004 was $36.98 per barrel, and it composed 47 percent of the cost of a gallon of regular gasoline. The share of the retail price of regular grade gasoline that crude oil costs represent varies somewhat over time and among regions.

Federal, State, and local taxes are a large component of the retail price of gasoline. Taxes (not including county and local taxes) account for approximately 19 percent of the cost of a gallon of gasoline. Within this national average, Federal excise taxes are 18.4 cents per gallon and State excise taxes average about 21 cents per gallon.  Also, eleven States levy additional State sales and other taxes, some of which are applied to the Federal and State excise taxes.
 
Additional local county and city taxes can have a significant impact on the price of gasoline. Refining costs and profits comprise about 19 percent of the retail price of gasoline. This component varies from region to region due to the different formulations required in different parts of the country.

Distribution, marketing and retail dealer costs and profits combined make up 9 percent of the cost of a gallon of gasoline. From the refinery, most gasoline is shipped first by pipeline to terminals near consuming areas, and then loaded into trucks for delivery to individual stations.
 
Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase gasoline for resale to the public. The price on the pump reflects both the retailer’s purchase cost for the product and the other costs of operating the service station. It also reflects local market conditions and factors, such as the desirability of the location and the marketing strategy of the owner.

Because gasoline is made of crude oil, the biggest reason for the fluctuation in gas prices has to be the price of that crude oil.  Essentially, crude oil prices are determined by supply and demand.  However, world events can certainly affect the price of crude oil.  The price on a barrel of oil rose sharply during the following world events:

·	The Arab oil embargo in 1973
·	The Iranian revolution in 1978
·	The Iran/Iraq War in 1980
·	The Persian Gulf Conflict in 1990
·	The Iraq War currently being fought today

The turmoil occurring in these countries during these difficult times certainly affected production of oil and thus affected oil prices as well.

Believe it or not, even environmental and weather problems can affect gas prices.  When Hurricane Katrina hit in 2005, some crucial oil refineries located in the region were devastated.  That meant that oil had to be refined elsewhere and then transported.  This increased fuel costs with the distance involved during this process.



For more information about alternative fuel, please refer to my website   <YOUR WEBSITE URL>

Take Care,
Derek Robson
AltPower
http://www.altpower.yolasite.com