The number on the sign is really four numbers stacked together. Knowing what they are, and which ones an operator can actually move, explains both why pump prices swing and where a fuel business makes its living.
The four pieces
EIA tracks the split every month. Across 2025, the average retail price was $3.10 a gallon, and it broke down like this:
- Crude oil: about 52%, or roughly $1.60 of that gallon. The raw material, the largest single piece.
- Refining: about 15%, or roughly $0.47. Turning crude into finished fuel, plus the refiner's margin.
- Distribution and marketing: about 16%, or roughly $0.49. Moving and selling the fuel, plus the margins along the way.
- Taxes: about 17%, or roughly $0.54. Federal and state fuel taxes and any local fees.
The proportions drift month to month as crude prices, refining conditions, and demand change. When crude spikes, its share grows and squeezes everything else. Check EIA's current gasoline price breakdown before quoting these splits.
Why crude dominates
Gasoline is made from crude, so the raw-material cost flows straight into the price. When crude rises or falls, the pump price follows with a lag, which is why local pump prices track world oil markets. It is the piece an operator has the least control over.
Distribution and marketing: where you live
This slice covers getting finished fuel from the refinery to the pump and selling it: transportation, terminal and jobber operations, the station's costs, and the margins. It is where a jobber and a station actually make money. On the 2025 split, that is roughly 49 cents of a $3.10 gallon shared by everyone between the rack and the nozzle, which is why dealer margins run so tight and why FastDragon tracks true cost and margin by product and site inside that slice.
The tax slice
The federal gasoline tax is 18.4 cents a gallon and has not moved since 1993. State taxes are where the spread lives: from about 9 cents in Alaska to about 70.9 cents in California, with the state average near 33.5 cents. Rates change almost every January, so confirm current figures with the fuel tax by state picture before pricing against them.
Frequently asked
Why do pump prices jump fast but fall slowly?
Economists call it asymmetric pass-through, or "rockets and feathers." Stations raise the sign quickly when wholesale cost spikes to protect thin margins, then walk it down slowly to recover what the spike cost them. Retail fuel margins are often widest in the weeks right after crude falls.
How much does a gas station actually make on a gallon?
NACS data puts the typical retail markup around 30 to 40 cents a gallon before expenses. Credit card fees alone run roughly 8 cents a gallon, and after labor, rent, and delivery the net is usually only a few cents. That is why most stations count on in-store sales for their profit.
Why is gasoline so much more expensive in California?
California stacks the highest state gas tax in the country, about 70.9 cents a gallon as of 2026, on top of cap-and-trade and low-carbon-fuel program costs. It also requires a special CARB gasoline blend that few refineries outside the state produce, so supply is isolated. The premium is structural and persists no matter what crude does.
Who sets the price on the sign?
The station operator does, even at branded sites. The brand controls fuel specs and image standards, not the street price; the operator starts from that day's delivered wholesale cost plus taxes and watches nearby competitors. That is why two stations selling the same branded fuel a mile apart can post different numbers.