As an energy economist, I am often asked about what contributes to gas prices and what different policies can do to affect them.
The price of a retail gallon of gas is the sum of four things: the cost of crude oil, refining, distribution and marketing, and taxes.
In nationwide figures from January 2026, crude oil accounted for about 51% of the pump price, refining roughly 20%, distribution and marketing about 11% and taxes about 18%. That mix shifts with conditions: When crude oil prices spike, that can drive more than 60% of the price; when the price drops, taxes and logistics are larger shares of the cost.
Because the price of crude oil is the largest element, most of the price at the pump is derived from the global oil market.
Usually, big swings in crude prices come mainly from shifts in global demand and expectations – not from supply disruptions, according to widely cited research in 2009 by the economist Lutz Kilian.
But what is happening in early 2026 with the war in Iran is one of the exceptions: a classic supply shock. Severe disruptions to shipping through the Strait of Hormuz and attacks on Middle East oil infrastructure have taken millions of barrels a day off the global market.
Most drivers generally can’t quickly reduce how much they drive or how much gas they use when prices rise, so gasoline demand doesn’t change much in the short run. That means a jump in crude costs tends to result in people paying more rather than driving less.
Refining turns crude into gasoline at industrial scale. The U.S. doesn’t have a single gasoline market, though. Roughly a quarter of U.S. gasoline is a cleaner-burning blend of petroleum-derived chemicals called “reformulated gasoline,” which is required in urban areas across 17 states and the District of Columbia to reduce smog.
California uses an even stricter formulation that few out-of-state refineries make. California is also geographically isolated: No pipelines bring gasoline in from other U.S. refining regions.
California’s gasoline prices have long run above the national average, explained in part by higher state taxes and stricter environmental rules. But since a refinery fire in Torrance, California, in 2015 reduced production capacity, the state’s prices have been about 20 to 30 cents a gallon higher than what those factors would indicate.
Energy economist and University of California, Berkeley, professor Severin Borenstein has called this the “mystery gasoline surcharge” and attributes it to the fact that there isn’t as much competition between refineries or gas stations in California as in other states. California’s own Division of Petroleum Market Oversight says the surcharge cost the state’s drivers about $59 billion from 2015 to 2024. It’s not exactly clear who is getting that money, but it could be gas stations themselves or refineries, through complex contracts with gas stations.
The distribution and marketing category covers the costs of everything involved in getting the gasoline from the refinery gate to your tank.
Gasoline moves by pipeline, ship, rail and truck to wholesale terminals, and then by local delivery truck to service stations.
At the retailer’s end, the key factors are station rent and labor, the cost to buy gasoline in bulk to be able to sell it, credit card fees of as much as 6 to 10 cents a gallon at current prices, and franchise fees paid to the national brand, such as Sunoco or ExxonMobil, for permission to put their branding on the gas station.
Most gas station operators net only a few cents per gallon on fuel itself – which is why many gas stations are really convenience stores with pumps out front. Borenstein and some of his collaborators have also documented that retail gas prices rise quickly when wholesale costs climb but fall slowly when wholesale costs drop.
The federal government charges a tax on fuel, of 18.4 cents a gallon for gasoline and 24.3 cents a gallon for diesel. States charge their own taxes, ranging from 70.9 cents a gallon for gas in California to 8.95 cents in Alaska.
When gas prices rise, many politicians start talking about temporarily suspending their state’s gas tax. That does reduce prices, but not as much as politicians – or consumers – might hope. Research on past gas tax holidays has found that consumers get about 79% of the reduction in gas taxes. That means oil companies and fuel retailers keep about one-fifth of the tax cut for themselves rather than passing that savings to the public.
Gas tax holidays also reduce funding for what the taxes are designed to pay for, typically roads and bridges. That pushes road and bridge upkeep costs onto future drivers and general taxpayers.
There is an additional problem, too: Taxes on gasoline are supposed to charge drivers for some of the costs their driving imposes on everyone else – carbon emissions, local air pollution, congestion and crashes. But Borenstein has found that U.S. fuel tax levels are already far below the true cost to society. Removing the tax on drivers effectively raises the costs for everyone else.
The 1920 Jones Act is a federal law that requires cargo moving between U.S. ports to travel on vessels built and registered in the U.S., owned by U.S. citizens, and crewed primarily by U.S. citizens and permanent residents. Of the world’s 7,500 oil tankers, only 54 meet this requirement. Only 43 of these can transport refined fuels such as gasoline.
So, despite significant refining capacity on the Gulf Coast, some U.S. gasoline is exported overseas even as the Northeast imports fuel, in part reflecting the relatively high cost of moving fuel between U.S. ports.
Economists Ryan Kellogg and Rich Sweeney estimate that the law raises East Coast gasoline prices by about a penny and a half per gallon on average, costing drivers roughly $770 million a year. In light of the war’s effect on gas prices, the Trump administration has temporarily suspended the Jones Act requirements – an action more commonly taken when hurricanes knock out Gulf Coast refineries and pipeline networks.
The result of all these factors is that the price that drivers see at the pump mostly reflects the global price of crude, plus a stack of domestic costs, only some of which are inefficient.
Tax holidays give a partial, short-lived rebate. Jones Act waivers trim pennies, though permanent repeal may cause more fundamental changes, such as reduced rail and truck transport of all goods, which could lower costs, emissions and infrastructure damage associated with cargo transportation. Harmonizing fuel blends across states and seasons may lower prices somewhat, but likely at the expense of increased emissions.
Ultimately, the best protection against oil price shocks is a more efficient gas-burning vehicle, or one that doesn’t burn gasoline at all. In the meantime, the best I can offer as an economist is clarity about what that $4.30 actually buys.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
]]>Assistant Professor of Economics, Georgia Institute of Technology
Shelley Wunder-Smith
Director of Research Communications
Georgia Institute of Technology
After days of testing at General Motors’ Milford Proving Ground in Milford, Michigan, Georgia Tech won first place in the final year of the current EcoCAR EV Challenge cycle. Tech students competed against 13 universities over four years, applying emerging technologies to create intelligent mobility solutions.
During the four-year cycle, more than 250 undergraduate and graduate students from six of Georgia Tech’s Colleges worked to reengineer a Cadillac LYRIQ EV, adding a new front motor, a new clutch-enabled rear motor, and automated driving features. In the Motor City, Tech earned 867 out of 1,000 points, outperforming its competitors across technical, vehicle, and connected automation challenges. The team stood out in the Connected Driving Evaluation, developed by Argonne National Laboratory, to measure how effectively teams integrate vehicle connectivity with automated driving features. The GT team also excelled in lateral automation with strong lane-centering and automatic parking performance.
While meeting all design targets, Tech’s car delivered the competition’s most impressive acceleration, and the team was the only group to successfully demonstrate automatic parking.
Teams were tested at the end of each year of the competition cycle, with Tech securing multiple top-three finishes in years past. As the Yellow Jackets were crowned the winners of year four at the final awards ceremony, faculty advisor Antonia Antoniou says the elation and relief felt among the team members were a testament to the group’s resilience.
“They really are the best of Georgia Tech. There were hurdles along the way where they faced major setbacks, including catastrophic equipment failures that could’ve discouraged them, but they were relentless in their pursuit of perfection,” Antoniou, a professor in the George W. Woodruff School of Mechanical Engineering, said.
Project manager Eric Gustafson has been with the team since day one, and the victory is something he dreamed of and hopes every team member during the last four years can revel in.
“It was surreal,” he said. “A single moment validating every all-nighter and difficult gauntlet our team worked through to compete against teams with budgets two and sometimes three times larger than ours. To win this challenge, at this Institute, speaks to the tenacity and sheer resilience that Tech students have. To actually execute, almost flawlessly, over a four-year span with different students coming into the program at different times, is a ‘helluva’ achievement.”
In addition to the first-place overall finish, the team also earned victories in 11 of the competition’s engineering awards and two communications awards.
First Place System Design and Integration Presentation
First Place Connected and Automated Vehicle Systems Presentation
First Place Connected Driving Evaluation – Sponsored by dSPACE
First Place Energy Consumption
First Place Consumer Acceptability
Stay in Your Lane
First Place Vehicle Drivability Evaluation
First Place CARB CAV Energy Consumption
First Place Vehicle Technical Specifications: Georgia Tech; Ohio State University and Wilberforce University
First Place Combined Longitudinal Acceleration
First Place Thermal Control Excellence - Sponsored by TCCI: Georgia Tech and the University of Alabama
First Place Communications Program: Georgia Tech and McMaster University
First Place Impact Video
With the conclusion of the current cycle, Antoniou and her fellow faculty advisor, David Taylor, a professor in the School of Electrical and Computer Engineering, will now lead recruitment for the team’s next competition cycle, alongside new faculty advisors, Associate Professors Sam Coogan (ECE) and Shuman Xia (ME), as well as communications mentor Jill Fennell, Frank K. Webb Academic Professional Chair in Communication Skills in the Woodruff School.
“The new team will have big shoes to fill,” Antoniou said. We are lucky to have the chance to work with the students at Georgia Tech, and they have a tremendous opportunity to ‘learn by doing’ and connect with industry partners in the process. I encourage anyone interested to apply because EcoCAR can open so many doors, and it’s a joy for us to watch these students become the leaders they are meant to be.”
In April, Tech was selected to compete in the competition for the fourth consecutive cycle. Participation in the EcoCAR Challenge is paired with coursework through Georgia Tech’s Vertically Integrated Projects program, allowing students to gain hands-on experience while earning academic credit.
For application information, visit the EcoCAR VIP’s website.
The possible treatment, which could become the first non-drug, non-surgical, long-acting therapy for glaucoma, uses the injection of a natural and biodegradable material to create a viscous hydrogel — a water-absorbing crosslinked polymer structure — that opens an alternate pathway for excess fluid to leave the eye.
“The holy grail for glaucoma is an efficient way to lower the pressure that doesn’t rely on the patient putting drops in their eyes every day, doesn’t require a complicated surgery, has minimal side effects, and has a good safety profile,” said Ross Ethier, professor and Georgia Research Alliance Lawrence L. Gellerstedt Jr. Eminent Scholar in Bioengineering in the Wallace H. Coulter Department of Biomedical Engineering at Georgia Tech and Emory University. “I am excited about this technique, which could be a game-changer for the treatment of glaucoma.”
The research, which was supported by the National Eye Institute and the Georgia Research Alliance, was published Dec. 7 in the journal Advanced Science. The research was conducted in animals, and shows that the approach significantly lowered the intraocular pressure.
As many as 75 million people worldwide have glaucoma, which is the leading cause of irreversible blindness. Glaucoma damage is caused by excess pressure in the eye that injures the optic nerve. Current treatments attempt to reduce this intraocular pressure through the daily application of eyedrops, or through surgery or implantation of medical devices, but these treatments are often unsuccessful.
To provide an alternative, Ethier teamed up with Mark Prausnitz, professor and J. Erskine Love Jr. Chair in the School of Chemical and Biomolecular Engineering at Georgia Tech, to use a tiny hollow needle to inject a polymer preparation into a structure just below the surface of the eye called the suprachoroidal space (SCS). Inside the eye, the material chemically crosslinks to form the hydrogel, which holds open a channel in the SCS that allows aqueous humor from within the eye to drain out of the eye through the alternative pathway.
There are normally two pathways for the aqueous humor fluid to leave the eye. The dominant path is through a structure known as the trabecular meshwork, which is located at the front of the eye. The lesser pathway is through the SCS, which normally has only a very small gap. In glaucoma, the dominant pathway is blocked, so to lessen pressure, treatments are created to open the lesser pathway enough to let the aqueous humor flow out.
In this research, the hydrogel props open the SCS path. A hollow microneedle less than a millimeter long is used to inject a droplet (about 50 microliters) of the hydrogel-precursor material. That gel structure can keep the SCS pathway open for a period of months.
“We inject a viscous material and keep it at the site of the injection at the interface between the back of the eye and the front of the eye where the suprachoroidal space begins,” Prausnitz said. “By opening up that space, we tap a pathway that would not otherwise be utilized efficiently to remove liquid from the eye.”
The injection would take just a few minutes, and would involve a doctor making a small injection just below the surface of the eye in combination with numbing and cleaning the injection site. In the study, the researchers, including veterinary ophthalmologist and first author J. Jeremy Chae, did not observe significant inflammation resulting from the procedure.
The pressure reduction was sustained for four months. The researchers are now working to extend that time by modifying the polymer material — hyaluronic acid — with a goal of providing treatment benefits for at least six months. That would coincide with the office visit schedule of many patients.
“If we can get to a twice-a-year treatment, we would not disrupt the current clinical process,” Prausnitz said. “We believe the injection could be done as an office procedure during routine exams that the patients are already getting. Patients may not need to do anything to treat their glaucoma until their next office visit.”
Beyond extending the time between treatments, the researchers will need to demonstrate that the injection can be repeated without harming the eye. The procedure will also have to be tested in other animals before moving into human trials.
“The idea of having a ‘one-and-done’ treatment that lasts for six months would be particularly helpful for those whose access to healthcare is non-optimal,” Ethier said. “Having a long-acting therapy would have an additional advantage during times of pandemic or other disruption when access to healthcare is more difficult.”
This research was supported by a grant from the National Eye Institute (R01 EY025286) and by the Georgia Research Alliance. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the funding agencies.
Mark Prausnitz serves as a consultant to companies, is a founding shareholder of companies, and is an inventor on patents licensed to companies developing microneedle-based products (Clearside Biomedical). These potential conflicts of interest have been disclosed and are being managed by Georgia Tech. J. Jeremy Chae, Jae Hwan Jung, Ethier, and Prausnitz are listed as co-inventors on an IP filing related to this study.
CITATION: J. Jeremy Chae, et al., “Drug-free, Non-surgical Reduction of Intraocular Pressure for Four Months After Suprachoroidal Injection of Hyaluronic Acid Hydrogel.” (Advanced Science, 2020) https://doi.org/10.1002/advs.202001908
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]]>Seventy-five Georgia Tech students and alumni have been awarded Graduate Research Fellowships from the National Science Foundation. The fellowships, valued at $159,000, include funding for three years of graduate study and tuition for graduate students pursuing full-time, research-based master’s and doctoral degrees in science, technology, engineering, and mathematics (STEM) or STEM education.
The Yellow Jacket recipients of the fellowship, which has supported over 70,000 students since its inception in 1952, were selected from a pool of more than 14,000 applicants nationwide. Fellowships are awarded to students “who have demonstrated potential for significant achievements in research.”
Alumni:
Graduate Students:
Walker has been a member of the Guggenheim School faculty since 2005 and has held several leadership positions, including associate chair for graduate studies. Prior to his appointment as chair, he served in the dean’s office as the College’s associate dean for academic affairs.
“Mitchell’s leadership and achievements reflect the excellence and innovation that define Georgia Tech,” said Raheem Beyah, provost and executive vice president for Academic Affairs. “As a longtime member of our faculty, he brings a deep understanding of the Institute’s values and aspirations to this new role. I am confident he will build on the College of Engineering’s extraordinary legacy and elevate its global impact.”
Walker is known for his ability to bring together expertise and partners across schools and colleges to develop high-impact programming, including the interdisciplinary Minor in Applications of Artificial Intelligence and Machine Learning.
He played a pivotal role in advancing the sustained advocacy that led to Georgia Tech securing $88 million in state funding for a new Aerospace Engineering Building. Under his leadership, the nation’s top-ranked public aerospace program built a compelling case through years of coordinated effort among faculty, staff, alumni, advisory board members, and past leaders. This momentum reflects Walker’s contributions to aligning academic excellence with strategic institutional advocacy to achieve a landmark investment for the Institute.
“Georgia Tech’s College of Engineering represents the very best in innovation, impact, and collaboration,” Walker said. “I am honored to lead such an accomplished community of faculty, staff, and students and look forward to building on its strong foundation. Together, we will continue to advance research, education, and partnerships that address the world’s most pressing challenges and improve lives.”
Walker is a respected leader in advanced propulsion research, focusing on experimental and theoretical studies of plasma propulsion concepts for spacecraft, including Hall thrusters, gridded ion engines, and vacuum facility effects. He directs Georgia Tech’s High-Power-Electric Propulsion Laboratory and is principal investigator and director of the $15 million Joint Advanced Propulsion Institute (JANUS), a multi-university NASA Space Technology Research Institute. JANUS develops strategies to overcome limitations in ground testing of high-power electric propulsion systems, enabling and expanding their use in flight.
Walker is a fellow of the American Institute of Aeronautics and Astronautics and serves as a member of the organization’s Electric Propulsion Technical Committee. He is also an associate editor of the Journal of Spacecraft and Rockets and serves on the editorial boards of Frontiers in Physics and Frontiers in Astronomy and Space Sciences – Plasma Physics. In addition, he has delivered expert witness testimony to the Space Subcommittee of the House of Representatives to help guide national investments in space propulsion technology.
His contributions have been recognized with numerous honors, including the Air Force Office of Scientific Research Young Investigator Program Award, the AIAA Lawrence Sperry Award, the AIAA Sustained Service Award, and the Georgia Power Professor of Excellence Award.
As dean, Walker will lead the College’s academic and research enterprise, which includes more than 21,000 students, 50 degree tracks, and nearly 500 faculty members. Its undergraduate program is ranked No. 3 in the nation by U.S. News & World Report, and the graduate program is No. 4. All 11 of its programs are consistently ranked in the top 10.
Walker succeeds Beyah, who began his term as provost last November.
“I would like to thank Doug Williams for his steady leadership and service as interim dean during this important transition,” Beyah said. “Since November, he has provided critical stability for the College, and we are deeply grateful for his support of our faculty, staff, and students. I would also like to thank the search committee and their chair, Dean Vivek Sarkar. Vivek and the committee brought world-class candidates forward during this process, and their work has resulted in an exceptional new dean.”
Writer: Brittany Aiello, Faculty Communications Program Manager, Executive Communications, Institute Communications
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