Where Your Gas Money Goes

The Union of Concerned Scientists explains how oil companies profit from your pain at the pump.
Union of Concerned Scientists
February 8, 2013
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Reducing oil use is a smart strategy for our pocketbooks, our climate and our health. 
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This article was reposted with permission from the Union of Concerned Scientists.

Every year, Americans spend hundreds of billions of dollars at the gas pump, but where does that money go? To find the answer, UCS examined how drivers' gas dollars are distributed among all the stakeholders involved in getting oil from the ground to your gas tank.

The results are clear. Your gas money doesn't support your local gas station, nor does it benefit you financially, even if you own oil company stock. Most of the money you spend at the pump goes directly to one place: oil companies.

You have a choice when it comes to your oil use: Continue pumping your money into oil company profits or invest in fuel efficiency and keep the profits in your pocket instead.

Americans Spend A Lot of Money on Gas

Vehicle owners, on average, spend almost as much on gas as on the vehicle itself.  • Vehicle owners, on average, spend almost as much on gas as on the vehicle itself.  

• A typical American driver will spend more than $22,000 on gas over the lifetime of a vehicle purchased in 2011 with average fuel efficiency (22.8 mpg).

Most of Your Gas Money Goes Directly to Oil Companies 

• Out of the more than $22,000 spent on gas over the lifetime of an average vehicle bought in 2011, oil companies rake in about $15,000.

• Of the remainder, 14 percent of the money spent on gasoline goes to taxes that help pay for roads and transportation services, 10 percent to refining costs, and 8 percent to distribution and marketing.

• Gas stations average only three to five cents of profit from each gallon of gasoline sold. They make more profit off the bottled water and candy you buy inside than off the fuel you buy outside.

You Gain Virtually Nothing in Return — Even if You Own Stock in Oil Companies 

• Regardless of how many shares you may own in oil companies, your oil use does not benefit your bottom line.

• Say you have $20,000 invested in ExxonMobil, the largest publicly traded oil company in the world. If you spent $1,700 on gas from ExxonMobil over the course of a year, your fuel purchase would yield far less than a penny in stock earnings. Even if you had $1 million invested, you would still get less than one cent in return after spending almost $2,000 on gasoline.

Investing in Fuel Efficiency Always Pays Dividends 

• Rather than getting pennies in return for what you spend at the pump, you can save thousands by investing in a fuel-efficient vehicle, and even more by investing in a hybrid vehicle, even after paying for the upfront cost of the hybrid technology.

• While you may pay $3,500 more for a fuel-efficient vehicle like a Ford Fusion SE Hybrid, you’ll save nearly $9,000 in fueling costs over its lifetime. Which would you prefer, a penny growth in your stock or thousands more in your pockets?

• By saving money at the pump, you will have more money to spend in other sectors of the economy — from education to construction — that have higher job growth potential compared with the oil and gas industry.

• Reducing our oil use is a smart strategy for our pocketbooks, our climate, and our health. Putting efficient technologies and innovative solutions to work, we can cut our projected oil use in half—saving more than 11 million barrels of oil every day by 2035. Learn more about the Half the Oil plan and discover what you can do to help reduce U.S. oil use.


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Post a comment below.

 

Nicholas Johnson
3/5/2013 2:51:55 PM
Thank you, I haven't seen the breakdown of this before. Very insightful.

Jerry Segers
3/2/2013 4:01:14 PM
I don't know where the Union of Concerned Scientists get their information, but I find this article grossly misleading. The information they used for profits at the local store and taxes are reasonably correct, but the information about the money going to the oil companies while probably correct is very misleading. If you look at the SEC report for 2011as reported in Wikipedia on March 3, 2013 Exxon/Mobile took in approximately 486 Billion dollars. Of that only 75 billion were actually profits. The rest went to pay operating expenses including the salaries of 83 thousand people and hundreds of supplier companies with their employees. Of this 75 billion profit they paid the government 32 billion in taxes leaving only 41 billion in actual profits (A 42% tax rate). While 41billion looks like a lot of money they are a large company with assets of 359 billion. These assets are what investors have purchased over the years and the means the company has to make money while supplying you with fuel. With these numbers you can calculate the return on investment of about 11% which is held for growth or returned to investors (Stock Holders). (This is equivalent of you putting your money in the bank and getting 11% interest - which you could do if the FED were not holding interest low) This low number is why the Union of Concerned Scientists note that you will never get your gas money back by investing in the oil companies. What they should have said is that you can not get your money back in profits on your investment because the oil company profits are very low. Do no misunderstand, I am no friend of the oil companies, but it infuriates me to see anyone making legitimate companies look bad just to make a point. I happen to rate the oil companies slightly above Monsanto. They only reason they are higher is I need their product and they are not tampering with my food supply.

Gerard LaVallee
3/2/2013 11:30:35 AM
I prefer that they get a return on their investment so they can continue research & development of future oil production. It will be a long time before we can produce vehicles that do not use petroleum fuels and we will need gasoline & heating oil in the meantime.

RICHARD ANDERSON
3/1/2013 11:01:53 PM
I strongly object to these kinds of articles which demonize corporations for making money. That is what they are in business for! That is why those of us who work for a living work! We do it to make money! Perhaps MEN ought to look at themselves. Do they seek to be profitable? Do your writers and editors work for free? If you answer yes to either of those questions, then there is one word for you - hypocrite!

JOHN & VIRGINIA LEDOUX
3/1/2013 9:50:51 PM
I buy and invest in what I want. No more kool-aid.








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