Source: Energy Information Agency.

Retail Motor Gasoline Prices in Selected Countries, 1990-2006

Even if the price of crude oil is roughly similar on all global markets, there are significant differences in the retail price of gasoline. The major components behind gasoline retail prices are:

• Crude oil prices. Mainly dictated by global energy markets and is a function of supply and demand as wells as of geopolitical risks premiums. Thus, crude oil prices tend to fluctuate on a daily basis. In the United States, crude oil prices accounted for about 53% of gasoline retail prices.
• Taxes. The taxation of gasoline sales has been a source of income for various levels of government. This is one of the most important factor that explains global price variations with Europe accounting for the highest fuel tax rates. They account for 19% of gasoline retail prices in the United States.
• Refining costs. Costs vary between countries and administrative divisions due to economies of scale and also to specific formulation requirements. This component counts for 19% of retail prices.
• Distribution costs. Include a wide array of activities related to bring gasoline to the final consumer. From refineries, gasoline is shipped mostly by pipeline to regional terminals and storage facilities. Then, gasoline is loaded into trucks for delivery to service stations. Some service stations are owned and operated (or franchised) by refiners, while others are independent businesses purchasing gasoline for resale. The price at the pump reflects both the purchase cost for the product and operating costs of the service station.

Two major price groups appear on the above graph; those with relatively low fuel taxes and those with high fuel taxes.