Consumer Corner
What’s in the price of a gallon of gas?
Robert I. Harris, Georgia Institute of Technology
The U.S. Energy Information Administration expects nationwide retail gasoline prices to average near US$4.30 a gallon for April 2026 – the highest monthly average of the year. The political response has been familiar. Georgia has suspended its state gas tax, other states are weighing their own tax holidays, and the White House has issued a temporary waiver of a law known as the Jones Act in hopes of moving more domestic fuel to East Coast ports.
As an energy economist, I am often asked about what contributes to gas prices and what different policies can do to affect them.
The price of a retail gallon of gas is the sum of four things: the cost of crude oil, refining, distribution and marketing, and taxes.
In nationwide figures from January 2026, crude oil accounted for about 51% of the pump price, refining roughly 20%, distribution and marketing about 11% and taxes about 18%. That mix shifts with conditions: When crude oil prices spike, that can drive more than 60% of the price; when the price drops, taxes and logistics are larger shares of the cost.
Crude oil is the biggest ingredient
Because the price of crude oil is the largest element, most of the price at the pump is derived from the global oil market.
Usually, big swings in crude prices come mainly from shifts in global demand and expectations – not from supply disruptions, according to widely cited research in 2009 by the economist Lutz Kilian.
But what is happening in early 2026 with the war in Iran is one of the exceptions: a classic supply shock. Severe disruptions to shipping through the Strait of Hormuz and attacks on Middle East oil infrastructure have taken millions of barrels a day off the global market.
Most drivers generally can’t quickly reduce how much they drive or how much gas they use when prices rise, so gasoline demand doesn’t change much in the short run. That means a jump in crude costs tends to result in people paying more rather than driving less.
Refining, regulations and the California puzzle
Refining turns crude into gasoline at industrial scale. The U.S. doesn’t have a single gasoline market, though. Roughly a quarter of U.S. gasoline is a cleaner-burning blend of petroleum-derived chemicals called “reformulated gasoline,” which is required in urban areas across 17 states and the District of Columbia to reduce smog.
California uses an even stricter formulation that few out-of-state refineries make. California is also geographically isolated: No pipelines bring gasoline in from other U.S. refining regions.
California’s gasoline prices have long run above the national average, explained in part by higher state taxes and stricter environmental rules. But since a refinery fire in Torrance, California, in 2015 reduced production capacity, the state’s prices have been about 20 to 30 cents a gallon higher than what those factors would indicate.
Energy economist and University of California, Berkeley, professor Severin Borenstein has called this the “mystery gasoline surcharge” and attributes it to the fact that there isn’t as much competition between refineries or gas stations in California as in other states. California’s own Division of Petroleum Market Oversight says the surcharge cost the state’s drivers about $59 billion from 2015 to 2024. It’s not exactly clear who is getting that money, but it could be gas stations themselves or refineries, through complex contracts with gas stations.
Getting the gas into your car
The distribution and marketing category covers the costs of everything involved in getting the gasoline from the refinery gate to your tank.
Gasoline moves by pipeline, ship, rail and truck to wholesale terminals, and then by local delivery truck to service stations.
At the retailer’s end, the key factors are station rent and labor, the cost to buy gasoline in bulk to be able to sell it, credit card fees of as much as 6 to 10 cents a gallon at current prices, and franchise fees paid to the national brand, such as Sunoco or ExxonMobil, for permission to put their branding on the gas station.
Most gas station operators net only a few cents per gallon on fuel itself – which is why many gas stations are really convenience stores with pumps out front. Borenstein and some of his collaborators have also documented that retail gas prices rise quickly when wholesale costs climb but fall slowly when wholesale costs drop.
The question of gas tax holidays
The federal government charges a tax on fuel, of 18.4 cents a gallon for gasoline and 24.3 cents a gallon for diesel. States charge their own taxes, ranging from 70.9 cents a gallon for gas in California to 8.95 cents in Alaska.
When gas prices rise, many politicians start talking about temporarily suspending their state’s gas tax. That does reduce prices, but not as much as politicians – or consumers – might hope. Research on past gas tax holidays has found that consumers get about 79% of the reduction in gas taxes. That means oil companies and fuel retailers keep about one-fifth of the tax cut for themselves rather than passing that savings to the public.
Gas tax holidays also reduce funding for what the taxes are designed to pay for, typically roads and bridges. That pushes road and bridge upkeep costs onto future drivers and general taxpayers.
There is an additional problem, too: Taxes on gasoline are supposed to charge drivers for some of the costs their driving imposes on everyone else – carbon emissions, local air pollution, congestion and crashes. But Borenstein has found that U.S. fuel tax levels are already far below the true cost to society. Removing the tax on drivers effectively raises the costs for everyone else.
The Jones Act: A small number that adds up
The 1920 Jones Act is a federal law that requires cargo moving between U.S. ports to travel on vessels built and registered in the U.S., owned by U.S. citizens, and crewed primarily by U.S. citizens and permanent residents. Of the world’s 7,500 oil tankers, only 54 meet this requirement. Only 43 of these can transport refined fuels such as gasoline.
So, despite significant refining capacity on the Gulf Coast, some U.S. gasoline is exported overseas even as the Northeast imports fuel, in part reflecting the relatively high cost of moving fuel between U.S. ports.
Economists Ryan Kellogg and Rich Sweeney estimate that the law raises East Coast gasoline prices by about a penny and a half per gallon on average, costing drivers roughly $770 million a year. In light of the war’s effect on gas prices, the Trump administration has temporarily suspended the Jones Act requirements – an action more commonly taken when hurricanes knock out Gulf Coast refineries and pipeline networks.
What moves the number
The result of all these factors is that the price that drivers see at the pump mostly reflects the global price of crude, plus a stack of domestic costs, only some of which are inefficient.
Tax holidays give a partial, short-lived rebate. Jones Act waivers trim pennies, though permanent repeal may cause more fundamental changes, such as reduced rail and truck transport of all goods, which could lower costs, emissions and infrastructure damage associated with cargo transportation. Harmonizing fuel blends across states and seasons may lower prices somewhat, but likely at the expense of increased emissions.
Ultimately, the best protection against oil price shocks is a more efficient gas-burning vehicle, or one that doesn’t burn gasoline at all. In the meantime, the best I can offer as an economist is clarity about what that $4.30 actually buys.
Robert I. Harris, Assistant Professor of Economics, Georgia Institute of Technology
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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(Feature Impact) Review any driver’s road trip checklist, and you’ll likely find some items always top the list, such as suitcases, snacks and (sometimes) a spare tire.
New research from Hankook Tire’s ongoing consumer Gauge Index Survey found that, when packing for a road trip, nearly 6 in 10 drivers (58%) said they would prioritize bringing a spare tire and tools. While the majority said they check their spare tire, getting stuck without air in the spare could quickly turn an adventure into a headache.
Before you hit the road next, here are three ways to prepare:
1. Check your vehicle.
Preparing for a long road trip requires more than simply saving room in the suitcase for souvenirs. Once the bags are packed, it’s easy to get behind the wheel and go. However, a quick car inspection is an important step, especially as 36% of Americans said if they could eliminate one travel inconvenience, it would be vehicle issues.
According to the survey, nearly all drivers (86%) check their fuel level before a road trip. Yet only about two-thirds (66%) inspect their engine fluids even though this is also a key recommendation before a long drive. Don’t forget to plan your refueling or EV charging stops ahead of time: 27% of drivers said running out of fuel is their top concern on the road.
2. Kick the tires.
Most drivers (78%) check their tire pressure before a road trip, and the majority of drivers (90%) have a spare tire in their vehicle. Yet less than half (44%) actually check their spare tire before a long drive. This may be because 71% of drivers regularly inspect their spare at least once a month, giving them peace of mind that it’s ready if needed.
Before heading out, experts recommend checking tire tread, as well. A quick coin test can confirm your tires are in good shape. Insert a nickel or quarter heads-down into the groove of the tire with the head pointing down. If the top of the head is visible, it’s recommended to replace the tires.
3. Pack the emergency essentials.
Beyond the phone charger and salty-and-sweet snack combo of choice, think about what else you might need if you find yourself in a roadside emergency. Many drivers consider a first-aid kit (25%) and navigation system or map (35%) essential additions to a spare tire. The latter could certainly help avoid many drivers’ biggest worries: More than 1 in 5 (21%) said getting stranded in a remote area is their worst-case scenario for a road trip mishap.
No matter where your journey takes you, a little preparation goes a long way. By referring to these insights from Hankook Tire’s Gauge Index Survey, you can start your adventure confidently prepared for whatever the road may bring.
Photo courtesy of Shutterstock
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Consumer Corner
Things to Look for When Considering an Auto Secured Loan
Many Americans continue to feel pressure from rising everyday expenses. Some are turning to credit cards and other expensive options like unsecured loans to cover surprise bills, manage a temporary gap in cash flow or even pay for basics like groceries and gas. For these people, an auto secured loan may offer another option for borrowers who own a vehicle and are looking for a more affordable way to access funds.
(Feature Impact) Many Americans continue to feel pressure from rising everyday expenses. Some are turning to credit cards and other expensive options like unsecured loans to cover surprise bills, manage a temporary gap in cash flow or even pay for basics like groceries and gas.
For these people, an auto secured loan may offer another option for borrowers who own a vehicle and are looking for a more affordable way to access funds.
Unlike an unsecured personal loan, an auto secured loan uses a vehicle as collateral. This can help borrowers qualify for higher loan amounts at better interest rates and with more flexible repayment terms.
Not all loans are created equal, however. If you’re considering an auto secured loan, here are six features that responsible lender Oportun suggests borrowers prioritize when evaluating their options.
1. Transparent, Easy-to-Understand Terms
A responsible lender will clearly explain the loan’s annual percentage rate (APR), monthly payment amount, repayment schedule, fees and total cost over time.
Borrowers should also understand what happens if a payment is missed and what options may be available if financial circumstances change. Clear information helps consumers make confident, informed decisions.
2. Affordable and Predictable Payments
The best loan is one that fits comfortably within your budget. Look for fixed monthly payments, reasonable repayment terms and the ability to pay off the loan early without penalties. Be cautious of products that rely on repeated refinancing or loan rollovers that can increase costs over time.
3. Lower-Cost Alternatives to Payday
When unexpected expenses arise, some consumers turn to high-cost forms of credit, such as payday loans, because they are often marketed as fast and easy to secure.
A responsible auto secured loan may offer a more affordable alternative with lower rates and repayment terms designed to help borrowers successfully repay what they borrow rather than become trapped in a cycle of debt. Be sure to shop rates across loan types and lenders.
4. Flexibility and Strong Customer Support
Life doesn’t always go according to plan. Borrowers should look for lenders that offer convenient account management tools, flexible payment options and access to knowledgeable customer support representatives. The ability to get help when it’s needed can make a meaningful difference over the life of your loan.
5. Credit Building Opportunities
A loan can do more than just solve an immediate financial need. Many responsible lenders report payment activity to the major credit bureaus, allowing borrowers to build or strengthen their credit history through consistent, on-time payments. Over time, a stronger credit profile can open the door to additional financial opportunities.
6. Responsible Collateral Practices
Before taking out an auto secured loan, it’s important to understand how a lender approaches collateral. Responsible lenders use a vehicle to help expand access to credit. They do not offer credit as a shortcut to taking ownership of your vehicle. Look for lenders that offer hardship assistance and work with borrowers facing financial setbacks before pursuing collection actions. Repossession should always be a last resort.
Choosing the Right Lending Partner
If you’re considering an auto secured loan, make sure the lender you choose supports these six practices. Responsible lenders design their products to help people both access funds for short-term needs and improve their long-term financial health.
For example, Oportun offers clearly priced auto secured personal loans designed to help members access affordable credit and repay them on time so they can build a stronger financial future. Since its founding, the lender has provided more than $22 billion in responsible and affordable credit, helped more than 1.3 million people establish a credit history and saved its members more than $2.5 billion in interest and fees.
By focusing on lenders that prioritize transparency, affordability, flexibility and successful repayment outcomes, borrowers can find an auto secured loan that meets their current and future financial needs. Discover more information by visiting Oportun.com.
Photos courtesy of Shutterstock
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Consumer Corner
10 Tips to Vacation-Proof Your Home While You’re Away
Vacation-Proof Your Home: Whether you’re headed toward the beach, the mountains, a new city or your favorite quaint small town, it’s exciting to look forward to a vacation. Use these 10 steps as a pre-vacation checklist so you can enjoy a worry-free trip.
10 Tips to Vacation-Proof Your Home While You’re Away
(Feature Impact) Whether you’re headed toward the beach, the mountains, a new city or your favorite quaint small town, it’s exciting to look forward to a vacation. Making sure all the logistics are planned, prepped and ready before your departure is the tough part, but it’s well worth putting in the effort now to save yourself stress later. That includes taking precautions to protect your home from break-ins, water damage and other unpleasant surprises you’d rather not return to.
“A vacation should end with great memories, not an unexpected repair bill,” said Larry Anderson, director of underwriting operations for Mercury Insurance. “Taking a few simple steps before you leave can help protect your home, reduce unnecessary stress and give you greater peace of mind while you’re away.”
Use these 10 steps as a pre-vacation checklist so you can enjoy a worry-free trip.
Lock Doors, Gates and Windows
You probably won’t forget to lock the front door before you leave, but other entry points can be easier to forget. Check all your windows, sliding glass doors, side entrances and gates. If you have any outbuildings like a shed or detached garage, secure them before you leave as well.
Automate Lights for a Lived-In Look
Although you don’t have to go full “Home Alone,” a home that appears occupied is less of a target for burglars. Use timers or automated smart devices to turn lights on and off throughout the day, ideally varying the schedules in different rooms.
Hold Mail and Packages
Beyond being easy prey for porch pirates, stacks of packages and overflowing mail signal no one is home to collect them. Contact your post office to place a hold on deliveries or arrange for a trusted neighbor to get the mail for you.
Consider Shutting Off the Water
A small leak can quickly become a big problem when there’s nobody home to notice. If practical, shutting off your home’s main water supply can help prevent major plumbing issues – and at the very least, be good for your peace of mind.
Set the Thermostat
It’s important to maintain a safe indoor temperature in your home while you’re away. The usual wisdom is to set the thermostat at 55-60 F during the winter to prevent pipes from freezing, and about 85 F during the summer to reduce energy use while protecting the home from excessive heat and humidity. Smart thermostats allow you to monitor and control temperatures remotely if the weather changes unexpectedly.
Test Smoke Alarms and Other Devices
Make sure your emergency alert systems are ready to do their jobs while you’re gone. Test smoke alarms, carbon monoxide detectors and any leak sensors, smart devices or security systems. If needed, replace batteries and confirm your monitoring apps are set up to get notifications promptly.
Ask a Trusted Person to Check In
Neighbors, friends or family members will often keep an eye on the place during your vacation (especially if you return the favor during theirs). It’s up to you whether you want to give them a key to check things out inside; otherwise, a quick walk around the property can identify external damage or signs of forced entry.
Be Social-Media Savvy
Even if you trust everyone on your online friends list, it’s better to be safe than sorry. Save the vacation photos to post once you’re safely back so you don’t unintentionally advertise that nobody’s home.
Tidy Up Outdoor Spaces
Well-maintained landscaping gives the impression someone is home and cares about the property. An afternoon of yardwork before you leave can keep things looking fresh for a while.
Review Your Homeowners Insurance
No matter how well you prepare, it’s smart to have a fallback plan in case something goes wrong. Before your trip, review your homeowners policy to make sure you know what it covers and how to reach your insurance company in the event of any incidents.
For more information about homeowners insurance coverage and ways to help protect your home year-round, visit MercuryInsurance.com.
Photos courtesy of Shutterstock
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