Energy
Explainer: What Drives Gasoline Prices?
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What Drives Gasoline Prices?
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Across the United States, the cost of gas has been a hot topic of conversation lately, as prices reach record-breaking highs.
The national average now sits at $5.00 per gallon, and by the end of summer, this figure could grow to $6 per gallon, according to estimates by JPMorgan.
But before we can have an understanding of what’s happening at the pump, it’s important to first know what key factors influence gasoline prices.
This graphic, using data from the U.S. Energy Information Administration (EIA), outlines the main components that influence gasoline prices, providing each factor’s proportional impact on price.
The Four Main Factors
According to the EIA, there are four main factors that influence the price of gas:
- Crude oil prices (54%)
- Refining costs (14%)
- Taxes (16%)
- Distribution, and marketing costs (16%)
More than half the cost of filling your tank is influenced by the price of crude oil. Meanwhile, the rest of the price at the pump is split fairly equally between refining costs, marketing and distribution, and taxes.
Let’s look at each factor in more depth.
Crude Oil Prices
The most influential factor is the cost of crude oil, which is largely dictated by international supply and demand.
Despite being the world’s largest oil producer, the U.S. remains a net importer of crude oil, with the majority coming from Canada, Mexico, and Saudi Arabia. Because of America’s reliance on imports, U.S. gas prices are largely influenced by the global crude oil market.
A number of geopolitical factors can influence the crude oil market, but one of the biggest influences is the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia.
Established in 1960, OPEC was created to combat U.S. dominance of the global oil market. OPEC sets production targets for its 13 member countries, and historically, oil prices have been linked to changes in OPEC production. Today, OPEC countries are responsible for about 60% of internationally traded petroleum.
Refining Costs
Oil needs to be refined into gasoline before it can be used by consumers, which is why refining costs are factored into the price of gas.
The U.S. has hundreds of refineries across the country. The country’s largest refinery, owned by the Saudi Arabian company Saudi Aramco, processes around 607,000 barrels of oil per day.
The exact cost of refining varies, depending on a number of factors such as the type of crude oil used, the processing technology available at the refinery, and the gasoline requirements in specific parts of the country.
In general, refining capacity in the U.S. has not been keeping up with oil demand. Several refineries shut down throughout the pandemic, but even before COVID-19, refining capacity in the U.S. was lagging behind demand. Incredibly, there haven’t been any brand-new refining facilities built in the country since 1977.
Taxes
In the U.S., taxes also play a critical role in determining the price of gas.
Across America, the average gasoline tax is $0.57 per gallon, however, the exact amount fluctuates from state to state. Here’s a look at the top five states with the highest gas taxes:
Rank | State | Gas tax (per gallon) |
---|---|---|
1 | California | $0.87 |
2 | Illinois | $0.78 |
3 | Pennsylvania | $0.77 |
4 | Hawaii | $0.77 |
5 | New Jersey | $0.69 |
*Note: figures include both state and federal tax
States with high gas taxes usually spend the extra money on improvements to their infrastructure or local transportation. For instance, Illinois doubled its gas taxes in 2019 as part of a $45 billion infrastructure plan.
California, the state with the highest tax on gas, is expecting to see a rate increase this July, which will drive gas prices up by around three cents per gallon.
Distribution and Marketing Costs
Lastly, the costs of distribution and marketing have an impact on the price of gas.
Gasoline is typically shipped from refineries to local terminals via pipelines. From there, the gasoline is processed further to ensure it meets market requirements or local government standards.
Gas stations then distribute the final product to the consumer. The cost of running a gas station varies—some gas stations are owned and operated by brand-name refineries like Chevron, while others are smaller-scale operations owned by independent merchants.
The big-name brands run a lot of advertisements. According to Morning Consult, Chevron, BP PLC, Exxon Mobil Corp., and Royal Dutch Shell PLC aired TV advertisements in the U.S. more than 44,495 times between June 1, 2020, and Aug. 31, 2021.
How Does the Russia-Ukraine Conflict Impact U.S. Gas Prices?
If only a fraction of America’s oil comes from Russia, why is the Russia-Ukraine conflict impacting prices in the U.S.?
Because oil is bought and sold on a global commodities market. So, when countries imposed sanctions on Russian oil, that put a squeeze on global supply, which ultimately drove up prices.
This supply shock could keep prices high for a while unless the U.S. falls into a recession, which is a growing possibility based on how recent data is trending.
Uranium
Visualizing the Uranium Mining Industry in 3 Charts
These visuals highlight the uranium mining industry and its output, as well as the trajectory of nuclear energy from 1960 to today.

When uranium was discovered in 1789 by Martin Heinrich Klaproth, it’s likely the German chemist didn’t know how important the element would become to human life.
Used minimally in glazing and ceramics, uranium was originally mined as a byproduct of producing radium until the late 1930s. However, the discovery of nuclear fission, and the potential promise of nuclear power, changed everything.
What’s the current state of the uranium mining industry? This series of charts from Truman Du highlights production and the use of uranium using 2021 data from the World Nuclear Association (WNA) and Our World in Data.
Who are the Biggest Uranium Miners in the World?
Most of the world’s biggest uranium suppliers are based in countries with the largest uranium deposits, like Australia, Kazakhstan, and Canada.
The largest of these companies is Kazatomprom, a Kazakhstani state-owned company that produced 25% of the world’s new uranium supply in 2021.
As seen in the above chart, 94% of the roughly 48,000 tonnes of uranium mined globally in 2021 came from just 13 companies.
Rank | Company | 2021 Uranium Production (tonnes) | Percent of Total |
---|---|---|---|
1 | 🇰🇿 Kazatomprom | 11,858 | 25% |
2 | 🇫🇷 Orano | 4,541 | 9% |
3 | 🇷🇺 Uranium One | 4,514 | 9% |
4 | 🇨🇦 Cameco | 4,397 | 9% |
5 | 🇨🇳 CGN | 4,112 | 9% |
6 | 🇺🇿 Navoi Mining | 3,500 | 7% |
7 | 🇨🇳 CNNC | 3,562 | 7% |
8 | 🇷🇺 ARMZ | 2,635 | 5% |
9 | 🇦🇺 General Atomics/Quasar | 2,241 | 5% |
10 | 🇦🇺 BHP | 1,922 | 4% |
11 | 🇬🇧 Energy Asia | 900 | 2% |
12 | 🇳🇪 Sopamin | 809 | 2% |
13 | 🇺🇦 VostGok | 455 | 1% |
14 | Other | 2,886 | 6% |
Total | 48,332 | 100% |
France’s Orano, another state-owned company, was the world’s second largest producer of uranium at 4,541 tonnes.
Companies rounding out the top five all had similar uranium production numbers to Orano, each contributing around 9% of the global total. Those include Uranium One from Russia, Cameco from Canada, and CGN in China.
Where are the Largest Uranium Mines Found?
The majority of uranium deposits around the world are found in 16 countries with Australia, Kazakhstan, and Canada accounting for for nearly 40% of recoverable uranium reserves.
But having large reserves doesn’t necessarily translate to uranium production numbers. For example, though Australia has the biggest single deposit of uranium (Olympic Dam) and the largest reserves overall, the country ranks fourth in uranium supplied, coming in at 9%.
Here are the top 10 uranium mines in the world, accounting for 53% of the world’s supply.
Of the largest mines in the world, four are found in Kazakhstan. Altogether, uranium mined in Kazakhstan accounted for 45% of the world’s uranium supply in 2021.
Uranium Mine | Country | Main Owner | 2021 Production |
---|---|---|---|
Cigar Lake | 🇨🇦 Canada | Cameco/Orano | 4,693t |
Inkai 1-3 | 🇰🇿 Kazakhstan | Kazaktomprom/Cameco | 3,449t |
Husab | 🇳🇦 Namibia | Swakop Uranium (CGN) | 3,309t |
Karatau (Budenovskoye 2) | 🇰🇿 Kazakhstan | Uranium One/Kazatomprom | 2,561t |
Rössing | 🇳🇦 Namibia | CNNC | 2,444t |
Four Mile | 🇦🇺 Australia | Quasar | 2,241t |
SOMAIR | 🇳🇪 Niger | Orano | 1,996t |
Olympic Dam | 🇦🇺 Australia | BHP Billiton | 1,922t |
Central Mynkuduk | 🇰🇿 Kazakhstan | Ortalyk | 1,579t |
Kharasan 1 | 🇰🇿 Kazakhstan | Kazatomprom/Uranium One | 1,579t |
Namibia, which has two of the five largest uranium mines in operation, is the second largest supplier of uranium by country, at 12%, followed by Canada at 10%.
Interestingly, the owners of these mines are not necessarily local. For example, France’s Orano operates mines in Canada and Niger. Russia’s Uranium One operates mines in Kazakhstan, the U.S., and Tanzania. China’s CGN owns mines in Namibia.
And despite the African continent holding a sizable amount of uranium reserves, no African company placed in the top 10 biggest companies by production. Sopamin from Niger was the highest ranked at #12 with 809 tonnes mined.
Uranium Mining and Nuclear Energy
Uranium mining has changed drastically since the first few nuclear power plants came online in the 1950s.
For 30 years, uranium production grew steadily due to both increasing demand for nuclear energy and expanding nuclear arsenals, eventually peaking at 69,692 tonnes mined in 1980 at the height of the Cold War.
Nuclear energy production (measured in terawatt-hours) also rose consistently until the 21st century, peaking in 2001 when it contributed nearly 7% to the world’s energy supply. But in the years following, it started to drop and flatline.
By 2021, nuclear energy had fallen to 4.3% of global energy production. Several nuclear accidents—Chernobyl, Three Mile Island, and Fukushima—contributed to turning sentiment against nuclear energy.
Year | Nuclear Energy Production | % of Total Energy |
---|---|---|
1965 | 72 TWh | 0.2% |
1966 | 98 TWh | 0.2% |
1967 | 116 TWh | 0.2% |
1968 | 148 TWh | 0.3% |
1969 | 175 TWh | 0.3% |
1970 | 224 TWh | 0.4% |
1971 | 311 TWh | 0.5% |
1972 | 432 TWh | 0.7% |
1973 | 579 TWh | 0.9% |
1974 | 756 TWh | 1.1% |
1975 | 1,049 TWh | 1.6% |
1976 | 1,228 TWh | 1.7% |
1977 | 1,528 TWh | 2.1% |
1978 | 1,776 TWh | 2.3% |
1979 | 1,847 TWh | 2.4% |
1980 | 2,020 TWh | 2.6% |
1981 | 2,386 TWh | 3.1% |
1982 | 2,588 TWh | 3.4% |
1983 | 2,933 TWh | 3.7% |
1984 | 3,560 TWh | 4.3% |
1985 | 4,225 TWh | 5% |
1986 | 4,525 TWh | 5.3% |
1987 | 4,922 TWh | 5.5% |
1988 | 5,366 TWh | 5.8% |
1989 | 5,519 TWh | 5.8% |
1990 | 5,676 TWh | 5.9% |
1991 | 5,948 TWh | 6.2% |
1992 | 5,993 TWh | 6.2% |
1993 | 6,199 TWh | 6.4% |
1994 | 6,316 TWh | 6.4% |
1995 | 6,590 TWh | 6.5% |
1996 | 6,829 TWh | 6.6% |
1997 | 6,782 TWh | 6.5% |
1998 | 6,899 TWh | 6.5% |
1999 | 7,162 TWh | 6.7% |
2000 | 7,323 TWh | 6.6% |
2001 | 7,481 TWh | 6.7% |
2002 | 7,552 TWh | 6.6% |
2003 | 7,351 TWh | 6.2% |
2004 | 7,636 TWh | 6.2% |
2005 | 7,608 TWh | 6% |
2006 | 7,654 TWh | 5.8% |
2007 | 7,452 TWh | 5.5% |
2008 | 7,382 TWh | 5.4% |
2009 | 7,233 TWh | 5.4% |
2010 | 7,374 TWh | 5.2% |
2011 | 7,022 TWh | 4.9% |
2012 | 6,501 TWh | 4.4% |
2013 | 6,513 TWh | 4.4% |
2014 | 6,607 TWh | 4.4% |
2015 | 6,656 TWh | 4.4% |
2016 | 6,715 TWh | 4.3% |
2017 | 6,735 TWh | 4.3% |
2018 | 6,856 TWh | 4.2% |
2019 | 7,073 TWh | 4.3% |
2020 | 6,789 TWh | 4.3% |
2021 | 7,031 TWh | 4.3% |
More recently, a return to nuclear energy has gained some support as countries push for transitions to cleaner energy, since nuclear power generates no direct carbon emissions.
What’s Next for Nuclear Energy?
Nuclear remains one of the least harmful sources of energy, and some countries are pursuing advancements in nuclear tech to fight climate change.
Small, modular nuclear reactors are one of the current proposed solutions to both bring down costs and reduce construction time of nuclear power plants. The benefits include smaller capital investments and location flexibility by trading off energy generation capacity.
With countries having to deal with aging nuclear reactors and climate change at the same time, replacements need to be considered. Will they come in the form of new nuclear power and uranium mining, or alternative sources of energy?
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