Motor Vehicle Fuel Tax Changes - Effective July 1, 2010
The California State Board of Equalization is changing motor vehicle fuel tax rates. Download the notice below to view the new changes.
Download tax change notice
Exxon Mobil: Energy outlook for 2030.
This article by Exxon Mobil outlines their analysis of 2030's energy requirements and possible solutions.
Visit Exxon Mobil's website
USA: Fuel Fraud - Thieves use pay-at-pump technology to steal millions.
This article describes how thieves may attempt to sabotage outdoor card readers to steal card numbers.
Visit Truckstop USA's website
THEFT IS UP—WHAT YOU CAN DO:
Now is the time to take extra precautions to
protect the fuel that you have so much money
CUSTOMERS—please review your cardlock
invoices carefully. If twice a month invoices
are not often enough, contact your office and
we can set you up to review your transactions
online with CFN. Fuel thefts are occurring through
the cardlock system via lost cards, stolen cards
and employee theft. If you are fueling at a
facility and notice any questionable activities,
please call our office.
TANKS—make sure you have locks on your
tanks. By switching your locks from a locking
gate valve with a locking ball valve can deter
fuel thefts. (Tank must be empty to switch out
locks—contact our office for more information)
underground tanks it is very difficult to make
changes to prevent theft due to the environmental
requirements. Contact our office for more information
on what we have tried.
THE CREDIT CARD COMPANIES FOR AIDING HIGHER
Half of a gas station’s fuel profits
go to credit card fees. With the price of fuel
increasing substantially over the last several
years, stations are paying credit card companies
5-7 cents per gallon in processing fees. On
the average last year gas station’s revenues
from fuel sales grew 25%, while the fees they
paid to credit card issuers jumped 40%. Credit
card fees are charged on the total $ of the
sale. Astute station owners must be aware of
the impact on their bottom line and actually
increase their margin profit to offset the credit
card fee impact that rising fuel prices cause.
(from SmartMoney.com—What Gas Stations
Won’t Tell You)
The new cleaner burning fuel E85 that many politicians
are backing has not received favorable support
from Consumer Reports. According to Consumer
Reports, the large drop in fuel mileage will
be more costly to the consumer and “in
effect, government support for flex-fuel vehicles
“is indirectly causing more gasoline consumption
rather than less”. Also, E85 will emit
less smog-forming nitrogen oxide ethanol emits
acetaldehyde, a probable carcinogen and something
that standard emissions-testing equipment is
not designed to measure.
Primer on Gasoline Prices
one of the main products refined from crude
oil, accounts for just about 17 percent of the
energy consumed in the United States. The primary
use for gasoline is in automobiles and light
trucks. Gasoline also fuels boats, recreational
vehicles, and various farm equipment.
While gasoline is produced year-round, extra
volumes are made in time for the summer driving
season. Gasoline is delivered from oil refineries
mainly through pipelines to a massive distribution
chain serving 168,987 retail gasoline stations
throughout the United States.1 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.
WHAT ARE THE COMPONENTS OF THE RETAIL
PRICE OF GASOLINE?
Source: Energy Information
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
In 2004, the price of crude oil averaged $36.97
per barrel, and crude oil accounted for about
47% of the cost of a gallon of regular grade
gasoline (Figure 1). In comparison, the average
price for crude oil in 2003 was $28.50 per barrel,
and it composed 44% 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
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 23 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.2 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 18%
of the retail price of gasoline. This component
varies from region to region due to the different
formulations required in different parts of
Distribution, marketing and retail dealer costs
and profits combined make up 12% 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.
DO GASOLINE PRICES FLUCTUATE?
Even when crude oil prices are stable, gasoline
prices normally fluctuate due to factors such
as seasonality and local retail station competition.
Additionally, gasoline prices can change rapidly
due to crude oil supply disruptions stemming
from world events, or domestic problems such
as refinery or pipeline outages.
Seasonality in the demand for gasoline - When
crude oil prices are stable, retail gasoline
prices tend to gradually rise before and during
the summer, when people drive more, and fall
in the winter. Good weather and vacations cause
U.S. summer gasoline demand to average about
5% higher than during the rest of the year.
If crude oil prices remain unchanged, gasoline
prices would typically increase by 10-20 cents
from January to the summer.
Changes in the cost of crude oil - Events in
crude oil markets were a major factor in all
but one of the five run-ups in gasoline prices
between 1992 and 1997, according to the National
Petroleum Council’s study, U.S. Petroleum
Supply - Inventory Dynamics.
About 47 barrels of gasoline are produced from
every 100 barrels of crude oil processed at
U. S. refineries, with other refined products
making up the remainder.
Crude oil prices are determined by worldwide
supply and demand, with significant influence
by the Organization of Petroleum Exporting Countries
(OPEC). Since it was organized in 1960, OPEC
has tried to keep world oil prices at its target
level by setting an upper production limit on
its members. OPEC has the potential to influence
oil prices worldwide because its members possess
such a great portion of the world’s oil
supply, accounting for about 40% of the world’s
production of crude oil and holding more than
two-thirds of the world’s estimated crude
oil reserves. Additionally, increased demand
for gasoline and other refined products in the
U.S. and the rest of the world is also exerting
upward pressure on crude oil prices.
Rapid gasoline price increases have occurred
in response to crude oil shortages caused by,
for example, the Arab oil embargo in 1973, the
Iranian revolution in 1978, the Iran/Iraq war
in 1980, and the Persian Gulf conflict in 1990.
Gasoline price increases in recent years have
been due in part to OPEC crude oil production
cuts, turmoil in key oil producing countries,
and problems with petroleum infrastructure (e.g.,
refineries and pipelines) within the United
States. Additionally, increased demand for gasoline
and other petroleum products in the U. S. and
the rest of the world is also exerting upward
pressure on prices.
Product supply/demand imbalances - If demand
rises quickly or supply declines unexpectedly
due to refinery production problems or lagging
imports, gasoline inventories (stocks) may decline
rapidly. When stocks are low and falling, some
wholesalers become concerned that supplies may
not be adequate over the short term and bid
higher for available product. Such imbalances
have occurred when a region has changed from
one fuel type to another (e.g., to cleaner-burning
gasoline) as refiners and marketers adjust to
the new product.
Gasoline may be less expensive in one summer
when supplies are plentiful versus another
when they are not. These are normal price fluctuations,
experienced in all commodity markets.
However, prices of basic energy (gasoline, electricity,
natural gas, heating oil) are generally more
volatile than prices of other commodities. One
reason is that consumers are limited in their
ability to substitute between fuels when the
price for gasoline, for example, fluctuates.
So, while consumers can substitute readily between
food products when relative prices shift, most
do not have that option in fueling their vehicles.
DO GASOLINE PRICES DIFFER ACCORDING TO REGION?
Although price levels vary over time, Energy
Information Administration (EIA) data indicate
that average retail gasoline prices tend to
typically be higher in certain States or regions
than in others Aside from taxes, there are other
factors that contribute to regional and even
local differences in gasoline prices:
Proximity of supply - Areas farthest from the
Gulf Coast (the source of nearly half of the
gasoline produced in the U.S. and, thus, a major
supplier to the rest of the country), tend to
have higher prices. The proximity of refineries
to crude oil supplies can even be a factor,
as well as shipping costs (pipeline or waterborne)
from refinery to market.
disruptions - Any event which slows or stops
production of gasoline for a short time, such
as planned or unplanned refinery maintenance,
can prompt bidding for available supplies. If
the transportation system cannot support the
flow of surplus supplies from one region to
another, prices will remain comparatively high.
Competition in the local market - Competitive
differences can be substantial between a locality
with only one or a few gasoline suppliers versus
one with a large number of competitors in close
proximity. Consumers in remote locations may
face a trade-off between higher local prices
and the inconvenience of driving some distance
to a lower- priced alternative.
ARE CALIFORNIA GASOLINE PRICES HIGHER AND MORE
VARIABLE THAN OTHERS?
The State of California operates its own reformulated
gasoline program with more stringent requirements
than federally-mandated clean gasolines. In
addition to the higher cost of cleaner fuel,
there is a combined State and local sales and
use tax of 7.25 percent on top of an 18.4 cent-per-gallon
Federal excise tax and an 18.0 cent-per-gallon
State excise tax. Refinery margins have also
been higher due in large part to price volatility
in the region.
California prices are more variable than others
because there are relatively few supply sources
of its unique blend of gasoline outside the
State. California refineries need to be running
near their fullest capabilities in order to
meet the State’s fuel demands. If more
than one of its refineries experiences operating
difficulties at the same time, California’s
gasoline supply may become very tight and the
prices soar. Supplies could be obtained from
some Gulf Coast and foreign refineries; however,
California’s substantial distance from
those refineries is such that any unusual increase
in demand or reduction in supply results in
a large price response in the market before
relief supplies can be delivered. The farther
away the necessary relief supplies are, the
higher and longer the price spike will be.
was one of the first States to ban the gasoline
additive methyl tertiary butyl ether (MTBE)
after it was detected in ground water. Ethanol,
a non-petroleum product usually made from corn,
is being used in place of MTBE. Gasoline without
MTBE is more expensive to produce and requires
refineries to change the way they produce and
distribute gasoline. Some supply dislocations
and price surges occurred in the summer of 2003
as the State moved away from MTBE. Similar problems
have also occurred in past fuel transitions.
Environmental programs - Some areas of the country
are required to use special gasolines. Environmental
programs, aimed at reducing carbon monoxide,
smog, and air toxics, include the Federal and/or
State-required oxygenated, reformulated, and
low-volatility (evaporates more slowly) gasolines.
Other environmental programs put restrictions
on transportation and storage. The reformulated
gasolines required in some urban areas and in
California cost more to produce than conventional
gasoline served elsewhere, increasing the price
paid at the pump.
Twenty-five States have passed legislation to
restrict the use of the gasoline additive MTBE
but only California, Kentucky, Missouri, New
Hampshire, New Jersey, New York, and Rhode Island
relied on the additive. The Energy Policy Act
of 2005, signed into law in August 2005, also
allows refiners to discontinue use of oxygenates
(including MTBE) in reformulated gasoline. Because
of the concerns of groundwater contamination,
MTBE is expected to be phased out in the U.
S. in the next few years. MTBE removal requires
large changes to gasoline production and distribution.
California faced temporary supply dislocations
and price volatility during the summer of 2003
as MTBE was removed from gasoline in the State.
Nevertheless, New York and Connecticut had a
relatively smooth transition phasing out MTBE
in 2004 as a result of better preparation from
the gasoline suppliers and distributors.
costs - Even stations located adjacent to each
other have different traffic patterns, rents,
and sources of supply that influence retail
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