CHARLESTON, W.Va. -- The high price of crude oil, driven by soaring international demand, is the primary factor in the increasing cost of gasoline, a West Virginia University economist told a legislative interim committee studying high gasoline prices, reported The Charleston Gazette.
Tom Witt, director of the Bureau of Business & Economic Research at the university, suggested there is little the state or federal government can do to lower gasoline prices, the report said.
Crude oil costs account for 53% of the cost of a gallon [image-nocss] of gasoline, followed by 20% for taxes, 18% for refining and 9% for distribution and marketing costs. The bulk of what we're seeing has been driven largely by international markets, and the demand by international markets is driving the price of gasoline, he said.
Jan Vineyard, executive director of the West Virginia Oil Marketers & Grocers Association, cited other factors that make gasoline prices in West Virginia higher than neighboring states, including:
The lack of gas pipelines serving the state. With no pipelines in the state, gasoline has to be delivered through more expensive methods, primarily by truck. West Virginia has only four gasoline terminals and no pipelines, compared to Pennsylvania, with 69 terminals and 12 pipelines; Ohio, with 47 terminals and eight pipelines; or Virginia, with 36 terminals and two pipelines. Only one small refinery is located within the state, resulting in higher prices for gasoline that has to be trucked in. Most gas stations in West Virginia are smaller-volume retailers. Stations that sell fewer gallons of gasoline have to charge more per gallon to cover fixed costs such as payroll and facilities than large-volume operations. West Virginia's gasoline tax is higher than all neighboring states but Ohio and Pennsylvania, a factor of having fewer gallons of gasoline to tax, because of the state's comparatively small population and gasoline consumption.Witt noted, however, that when adjusted for inflation, gasoline costs have not increased as rapidly as many other consumer products. We think it's higher because we got used to $2.29 a gallon, he said, according to the report.
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