Trusted local news leader for Kingman, Arizona & Mohave County
Thu, Dec. 12

Letter: Response to Oil Collusion dated July 5

John A., let me try to help you understand why gas prices are high in Kingman.

A barrel of oil is 50 gallons. Divide that by today's rate of $45.33 for crude oil and it breaks down to about $1.10 for the companies that purchase crude oil. Add federal tax of 18.4 cents and the Arizona tax of 18 cents and the cost for crude oil with taxes is up to $1.46 a gallon.

You would think that at $2.15 a gallon at the pump, it is big profit for the companies selling gas. It looks like they are making 69 cents a gallon profit, but they are not.

Remember that the $1.46 a gallon is for crude oil plus federal and state taxes. That crude oil still needs to be refined and transported to their prospective clients' gas stations.

I cannot tell you what the cost of refining crude oil is or the transportation cost. I do know that since there is not an oil refinery near Arizona, we pay more per gallon because of the transportation cost.

In fact, you will find that there is little profit for a gas station in pumping gasoline. You will not find a standalone station for gas. They have some other money-generating item attached, such as a repair shop or little grocery store.

Kingman is considered a remote location so we end up paying for almost everything.

I hope this help you understand the price difference. And no, I do not work for an oil company or gas station.

Terry Sipe

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