How To Estimate/Forecast The Wholesale & Retail Price Of Gasoline For Your State

Erick R Williams (2012)

As the price of oil continues to soar so does the price of gasoline.  Of all the products that are distilled from crude oil, gasoline is among the most expensive as it is "lighter" than other distillates such as diesel fuel.

To estimate what your local gas station is paying for gasoline follow these easy steps.  

1.   Go to http://www.bloomberg.com/energy/ to see what the current  is the current Nymex RBOB Gasoline Future cost per gallon. .  This is the fifth item down in the chart..  This is what gasoline is selling for, more or less, on the spot market and other markets as well.

2.  Now that  you have the cost of the gasoline you need to add taxes to that number.  The federal tax is 18.4 cents per gallon.  To find your state gasoline tax go to  http://www.easy-tax-information.com/support-files/gasoline-taxes-by-state-january-2011.pdf  and look up your state.

3.  Add the three numbers together: wholesale price of gas, federal tax, and state tax.

I live in Maryland.  Today the wholesale price of gasoline from Bloomberg is 315.28 which is the cost in cents so it is $3.15 per gallon.  The federal tax rate is 18.4 cents but I round it to eighteen cents.  The State of Maryland adds 41.9 cents per gallon (again, I round to .42).  Now, to get a rough estimate of what my local gas station is paying for a gallon of tax I add the three numbers:  $3.15 + .18 + .42 = $3.75.  Many gas stations sell gas for a penny or two above their cost.  Today, at two gas stations, I saw that the lowest grade was selling for $3.73 so the estimate works pretty well.

By the way, every $10 increase in the cost of a barrel of oil adds approximately .25 to a gallon gas.  This is not exact but it is very close.