factors in fuel pricing

Fuel prices are impacted by a number of factors, including changes in the price of crude oil, supply and demand, fuel specifications, government regulations, taxes, and transportation costs. Actual or perceived changes in these fundamentals, such as those caused by geopolitical uncertainty or market speculation, can have an impact on commodity markets. Therefore, it's important to recognize that a number of factors may combine to impact transportation fuel prices at any given time.

Historically, the price of all petroleum products has fluctuated as these factors change. More specifically with regard to motor gasoline:

Crude oil is a global commodity. Prices are established by a large number of transactions between buyers and sellers each day on commodity markets around the globe. In recent years, crude oil demand has been growing at its fastest pace in the past decade, driven in part by significant economic growth in developing countries and in the U.S. In fact, in the last few months, the price of crude has accounted for about 70 percent of the cost of gasoline, according to the Energy Information Administration. Since the U.S. demand for oil exceeds domestic production, we must compete in the world market for a share of both the world's available crude and, increasingly, refined products such as gasoline.

U.S. refiners must now produce and deliver to separate markets a number of types of gasoline in order to comply with Federal Clean Air Act requirements. This can present logistical challenges and increased costs through reduced economies of scale and limits on refining and distribution system flexibility. Fuel specification changes over the last couple of years include the phase in of ultra-low sulfur diesel for non-highway use. This and compliance with the federal Renewable Fuel Standard requiring up to 10 percent ethanol blends affect the amount of gasoline that can be produced in the U.S. and potentially the availability of refined product imports, adding further challenges to the supply chain.

ExxonMobil Position
Gasoline prices are influenced by a highly competitive retail marketplace and many other factors, including global commercial trading markets for crude oil and refined petroleum products. Our focus at ExxonMobil is to continually take steps to improve our ability to compete through a selective investment program, ongoing efforts to reduce costs, and a strong commitment to operational excellence.

Prices for crude products are set by worldwide markets comprised of buyers and sellers reacting to their individual needs as well as perceptions of supply and demand. Policies and initiatives need to be advanced that support the underlying economic fundamentals that lead to a balanced marketplace. In the U.S., this includes support for increased domestic crude production, and focused efforts to reduce the complexities and limitations that are creeping into the refinery and logistics systems due to the proliferation of specialty fuels.