Ooh yeah, my parents get sooo mad whenever they drive by the gas station! Especially lately, the price of our beloved gasoline is climbing fast and no one can predict when it'll top out. Believe it or not, just a few years ago gas prices were under a dollar for a time! Whoa, what happened?

Well, a bunch of things add up to make the price of fuel what it is. The first is the price of crude oil. Crude oil is the stuff that gasoline is made out of (more on that in a bit), and most of our oil is imported. We get our supply from many different places: Mexico, Russia, Venezuela, Saudi Arabia, etc. We're trying to ease away from importing from places like the Middle East because of the dangerous situation that's always over there and because most oil-producing countries in the Middle East have banded together to form the Organization of Petroleum Exporting Countries (OPEC), a kind-of monopoly that determines the supply of crude oil to the world. In fact, part of the reason gas prices are so high is that in February of this year OPEC decided to cut its supply of crude oil, driving the price up. Crude oil is 49% of the price of your dollar's worth of gas.

After the crude oil is bought, it has to go through a complicated process in order to make it into gasoline. This is called refining and is the second addition to the cost of your gas. There are only so many refineries in the country, and that means that we as a country have less gas available as a reserve, in case something drives the demand up like summer vacation driving, and that can cause the price of gas to fluctuate or go up-and-down a lot. Refining adds 10% to the cost of your fuel.

The third addition to gas prices is the cost of the gasoline company in marketing, advertising and in delivering the actual gasoline to the gas station. Usually, the more you see a type of gas advertised on TV, the more its company is spending on advertising in order to make you notice their product, and that's reflected in the price you pay at the pump. That's not to say that the cheapest gas is always the best, most often it isn't. Marketing costs you about 12% of your gas dollar.

The last thing that adds to the cost is, yeah you guessed it, taxes. There are all kinds of state and federal taxes lumped together that add up to almost 30% of the price of gasoline. These taxes are used for, among other things, maintaining the roads we drive on. Good roads are important, so taxes are a must.

By the way, the cost of gas is reflected in almost everything you buy, whether it's a TV, a hamburger, clothes, even your home! That's because almost everything needs to be transported by truck to wherever it's being sold. So the next time you hear about the price of gas going up, get ready because that means the price of everything will be going up!

Did You Know?

In 1950, the price of gas was only around 30 cents?