Which goes from 30.65 cents a gallon in Alaska, to 70 cents a gallon in Pennsylvania (this Includes the 18,4 cents a gallon Federal Fuel Tax).
Thus in my area of Pennsylvania, gasoline is selling for $2. 75 a gallon, 70 cents of that is tax.
There is also 42 gallons to a barrel on oil, thus any price per barrel has to be divided by 42 to get a price per gallon (Please note some sources says we get 44 gallons of "Product" out of each barrel of oil. That 44 barrels includes light oils, and heavy oils. Thus out of every barrel of oil you do NOT get 42 gallons of gasoline, but a mix of Gasoline and other products. You can produce more gasoline per barrel and less diesel/home heating oil/jet fuel per barrel depending on the process, but you will always have SOME gasoline or Diesel being produced out of each barrel of oil). For our proposes 42 gallons or gasoline per barrel is good enough to approximate price of gasoline per gallon . Thus 46 dollars a barrel divided by 42 equals just over $1.095 per gallon.
Distribution costs are quite low, about 40 cents a gallon according to a report out of California:
http://energyalmanac.ca.gov/gasoline/margins/
Refining cost tends to be running about another 40 cents during down times (can be as high a $1.40 during peak demand periods). Thus about 80 cents can be attributed to refining and distribution costs (and remember DISTRIBUTION COSTS increases the further you get from New Jersey or Texas, where most of the larger refineries are located, lower distribution costs closer to Texas and New Jersey, higher costs further away, 20 cents near Texas and New Jersey, 40 to 50 cents in the Mountains of Pennsylvania).
Side Note: Most gasoline in Middle America comes by barge up the Mississippi and Ohio River systems. Thus highest costs are in Pittsburgh then in St Louis. on the other hand the distribution costs are NOT that different, as compared to shipping it from those rivers inland, that is done by way less efficient trucks. The further from those rivers (and the New Jersey and Texas Coasts) the higher the cost of getting the gasoline to your local service station.
Go back to my price of $2.79, 70 cents for taxes, 80 cents for refining and distribution (I do live in the Mountains of Pennsylvania, so these tend to run higher then Philadelphia). Thus I have a minimum price of $1.50 per gallon when the price of oil is ZERO dollars per gallon (Lower prices as you near Philadelphia, not lower taxes but lower distribution costs).
Thus at the price of $46 dollars a barrel, prices will drop. You are looking at about $2.50 a gallon at $46 dollars a barrel in Pennsylvania.
Now, some distribution costs are lower then 40 cents a gallon, many gas stations use gas as a come on, they break even on gasoline and hope you buy things inside the store instead (i.e. such stores are willing to eat most of the 40 cents a gallon distribution costs as long as it brings in customers, thus $2,10 or $2.00 a gallon prices are possible).
On the other hand, $2,00 a gallon appears to be the bottom price of gasoline today in Pennsylvania given the refining, distribution and Gasoline taxes costs involved when it comes to the price of gasoline AND $46 a barrel for the price of oil. Lower prices for oil could reduce the price of gasoline closer to $1.50 if the cost of refining and distribution can be contained, but that appears to be the low end price for gasoline in Pennsylvania given gasoline taxes AND distribution costs.
Now, one more economic fact. In the 1990s, the last time we had an "Oil Glut" it was seen that the price of any price INCREASE from the well head to your local gasoline station took about four weeks, as people raised the price of gasoline to reflect what they were paying for they next set of gasoline to be sold, not the actual price of the gasoline being sold as of that date. On the other hand, prices CUTS, took eight weeks to go from well head to service station, as people did NOT want to take a loss on selling gasoline for less then they had paid for the gasoline they were selling, even through newer gasoline were even cheaper.
Thus I see a drop in the price of gasoline, but it will take a couple of months to take affect. Thus we will NOT see that much of a drop and it will be two months from now, not today when you look at the price of gasoline (and it will be a gradual drop over that two months, no big large drop, as gasoline sellers try to buy just enough gasoline that they can sell before the next price cut. We will see a slow drop in price unless someone does something, like invade Iraq etc.
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