Tag Archives: Gas Price

Interesting chart … One we frequently wonder about on what drives Gas Prices at the Pump … from our friends at Visual Capitalist …

Not sure if you are like us, but we’ve long wondered what makes the price of gasoline at the pump change and sometimes so dramatically.

Maybe this topic is more top of mind as with a larger vehicle it’s easy to get to the credit card max for the pump max of $100 this day and age!

Of course spot gas prices are a contributing factor (just over half), but as our friends here at Visual Capitalist point out along with the EIA, there are more factors than just the spot price of gasoline for what we pay at the pump.

Interesting but not surprising location of the Top 10 Largest Refineries… bottom right of chart!

The following from the actual article:

The Four Main Factors

According to the EIA, there are four main factors that influence the price of gas:

  • Crude oil prices (54%)
  • Refining costs (14%)
  • Taxes (16%) 
  • Distribution, and marketing costs (16%)

More than half the cost of filling your tank is influenced by the price of crude oil. Meanwhile, the rest of the price at the pump is split fairly equally between refining costs, marketing and distribution, and taxes.

Have a Great “Now you know how the pumps price of Gasoline occurs“ day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

OPEC lays the boom on the Oil boom …. Well maybe

With many friends, family, and investments in the energy sector, an interesting event recently occurred. While most Americans were feasting on Turkey, OPEC (Organizations of Petroleum Exporting Countries) announced they would continue pumping oil … even with prices in the 70’s per barrel, already down from the low $100’s.

OPEC continues to pump

We were not surprised by the decision, due to the following reasons:

  • OPEC as a whole is less important and thus fending for themselves a bit
  • Frequently countries continue to pump even as they are not supposed to
  • With less importance for OPEC members, they are more protective of their economy
  • Nice chance to push on levered US producers and maybe gain market share

Wall Street was very surprised, pushing market prices down into the $60’s!

 Good news

This picture from my local station … early AM fill  price/GallonGas Pump Price 12-9-14

While initially there will be pain, in the longer term, there are positives that come from a lower prices

  • As producers cut production supply will go down
  • Lower prices encourage expansive use
  • Cleansing process of less efficient producers (too much easy money leads to reckless behavior … like mounds of debt)
  • Better entry points for long-term investments (never catch the exact bottom)

One last item, we can all consider ourselves given a slight tax cut, possible at a very timely moment as filling up at the pump will leave a few extra greenbacks in our pockets for now. Especially handy as we enter the Holiday Season.

Have a Great Day!

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225