Summer’s heat is finally starting to fade. With that, consumers also should begin to see some relief from higher summer gas prices. While risks to price spikes remain, including the crisis in the Middle East boiling over or a hurricane hitting the gulf, September is usually the time when gas prices begin descending.
According to GasBuddy.com, the U.S. average for the price of gas is $3.60 per gallon, which is about $0.20 cheaper than a year ago. Some Americans are paying well over that price, while others enjoy relatively cheaper gas. Ever wonder why that is? Let’s take a closer look at what goes into the price of gas to see what consumers are really paying for.
The crude reality of gas prices
As the graphic to the right indicates, 70% of the price of gas as of July was directly related to the price of crude oil. Two months before that, crude oil represented 67% of the price at the pump. Because the price of crude oil varies, so does its portion of the price of gasoline. Basically, as the price of crude oil goes up, consumers can expect the price of gasoline to follow it higher.
We like to blame OPEC for our pain at the pump, and to some extent that’s true. Last year the U.S. imported about 10.6 million barrels of petroleum per day from about 80 different countries. Of that total, about 28% came from Canada, while OPEC countries represented around 40% of imports. That being said, only 40% of the petroleum consumed in the U.S. was imported last year, which was the lowest level since 1991. In fact, total oil imports dropped 6.9% last year, thanks to booming North American oil production.
That means 60% of our oil is home-made, so to speak. Many companies benefit from producing oil here at home each year, with one example being Northern Oil & Gas, Inc. (NYSEMKT:NOG). The company has really benefited from its small role in reducing our total oil imports. In fact, its revenue has grown by a three-year average of 237%, while its profits have jumped 122% over that same time frame. That growth has fueled its rise to No. 7 on Fortune’s list of fastest-growing companies. Northern Oil & Gas, Inc. (NYSEMKT:NOG) represents one of the many smaller U.S.-based oil companies that make money each time Americans fill up.