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How much in taxes and fees are we paying on a gallon of gas?

Taxes, fuel blends, and margins
Posted: 5:04 PM, Mar 21, 2022
Updated: 2022-03-22 14:20:51-04
Gas Prices, Bakersfield (FILE)

(KERO) — According to the National Association for Convenience and Fuel Retailing (NCAS), gas prices differ for three reasons: taxes, fuel blends, and margins. This means the role taxes play in price varies by state.

The average price of regular gas right now in Bakersfield is $5.78 per gallon.

All retailers must assess the 18.4-cent federal gas excise tax. That's on top of the state's additional taxes and fees.

The California gas tax is 51.1 cents per gallon and is expected to rise again in July.

Sales tax accounts for about 10-11 cents per gallon.

So, you paying about 80 cents per gallon in taxes.

Now let's talk fees. According to Stillwater Associates, an organization that deals in transportation fuels markets, there are three fees that you pay for gas.

The Underground Storage Tank fee is about 2 cents per gallon. This fee goes into a fund that provides "financial assistance to the owners and operators of underground storage tanks to remediate conditions caused by leaks, reimbursement for third-party damage and liability, and assistance in meeting federal financial responsibility requirements."

The Fuels Under the Cap fee, which is part of the state's Cap & Trade (C&T) program, which looks to offset greenhouse gas emissions, is about 15 cents per gallon.

And finally, the Low Carbon Fuel Standard fee is about 22 cents per gallon. This is tied to the fact that California is the only state that requires unique fuel blends. It's more costly to produce and raises the cost at the pump.

You are paying 39 cents per gallon in fees.

In total, you are paying an average of $1.19 in taxes and fees per gallon of gas.

Lastly, let's talk margins. The price of a gallon of gas can vary depending on the location of the store, nearby competition from other businesses and retailers, and the brand of fuel sold.

For example, according to the NCAS, "In the U.S., gas sales at convenience stores account for 53% of revenue dollars but only 42% of profit dollars. In other words, gas sales drive customer traffic but in-store sales drive the business—and increasingly in-store sales are generated by prepared food sales."