Filling up your gas tank may feel like second nature, but have you ever stopped to wonder how gas stations actually set their prices? It’s just one of many fascinating behind-the-scenes details about these petrol providers.
According to the U.S. Energy Information Administration, the price of retail gasoline is determined by a combination of four factors: the price of crude oil, taxes, refining costs and profits, and distribution and marketing costs. Crude oil makes up more than half the cost of regular gasoline; in January 2026, it accounted for 51%, with refining costs making up 20%, taxes 18%, and distribution and marketing costs 11%. The total cost of diesel, on the other hand, was 41% crude oil, 24% distribution and marketing costs, 18% refining costs, and 17% taxes.
Each of those four factors is impacted by additional subfactors. According to the American Petroleum Institute, the price of crude oil can be affected by global supply and demand, geopolitical developments, available inventories, and transportation costs, just to name a few. Then there are taxes, which combine the federal gasoline tax of 18.4 cents per gallon with local gasoline taxes (adding as little as $0.0895 per gallon in Alaska up to $0.7092 in California).
Refining costs are affected by operational costs at gasoline refineries, while distribution and marketing costs take into account the cost of transport, delivery, plus the overhead costs of running a gas station. Based on those ever-changing parameters, gas stations typically adjust their gas prices several times per week.
Most U.S. Gas Stations Make Less Than Half Their Profit From Gasoline
An estimated 80% of retail gasoline in the U.S. is sold at gas stations that also include a convenience store. And the sales from those stores actually make up most of the profits. While fuel sales account for 65% of the total sales at retail gas stations, the owners turn a profit of only $0.03 to $0.07 off each gallon of gas they sell. Those thin margins mean fuel sales account for just 38.8% of a gas station’s actual profit, according to a 2025 study from the National Association of Convenience Stores.
The study found that 38.9% of a gas station/convenience store business’ sales comes from food and drink sales, but with much higher profit margins. More than 73% of those sales are from prepared foods such as pizza, wraps, and sandwiches. That’s followed by packaged beverages, then snacks such as beef jerky and nuts, and finally sales from tobacco, merchandise, ATM fees, lottery tickets, and other common gas station purchases.
Media Release/Interesting Facts
