While there are multiple factors that influence the price of gasoline, the major components making up what you pay at the pump are crude oil prices along with federal and state
taxes.  The combined effect of these two components account for more than 73 percent of the cost of a gallon of gasoline.

Price fluctuation occurs due to four main factors:

1) Crude Oil Prices: Crude oil is the largest factor in the price of gasoline. Over the past several years, crude oil prices have fluctuated between a low of $18.28 in
November 2001 to a high of more than $120 per barrel in April 2008.

2) Low Gasoline Inventories/Increased Demand: As crude oil prices rise, refiners cut back on their crude oil purchases and reduce their gasoline production.  Also, gasoline demand has increased as the number of drivers and automobiles has increased.

3) Refinery and Distribution Problems: As witnessed in the aftermath of Hurricane Katrina in 2005, pipeline and refinery problems create tight supplies and spot shortages
which can cause a ripple effect throughout the entire U. S. gasoline market. West Virginia does not have pipelines that bring product into the state.  All product delivered to West Virginia has to come by barge and truck, which is a more expensive mode of transportation.  In addition, WV only has four product terminals while our
surrounding states have as many as 69 (PA).  West Virginia has one very small refinery with limited capacity, located in Newell, WV and operated by Ergon. These factors all raise
the product cost in West Virginia.

4) Higher Gasoline Production Costs: Government regulations now require cleaner burning, more expensive gasoline for many areas of the country.  Refiners now producemore than three-dozen different grades of gasoline throughout the country.

U.S. Gasoline Supply Network - By Region

As you can see, the price of gasoline is affected by many factors outside the control of your local gasoline station or convenience store operator. For additional information on
this topic, or if you would like someone to speak on the issue, please contact Jan Vineyard at (304) 343-5500.