While convenience store retailers like myself are on the front-lines in selling gasoline, it's difficult for us to predict when and if future price spikes will occur. After all, approximately 93 percent of the price of a gallon of gasoline is determined even before we take possession of it. Taxes account for more than a third of the price of gas. Another 19 percent of the price is from the cost to refine crude oil into gasoline. There also are several other factors that have contributed to the recent rise in prices, many of which are related to supply.
Prices are a product of supply and demand.
Good weather and vacation travel this time of year typically increases demand for gasoline by 5 percent. That tends to place stress on an already stretched supply system. This time of year is also when gasoline producers must put out new summertime formulations of gasoline required by the Environmental Protection Agency. This can affect prices as many regulations mandate different blends of gas for many areas of the country. These blends are more difficult and expensive to make, and are not interchangeable, further complicating supply problems.