Gas prices have always been a topic of conversation, but in 2026, many people and businesses have faced unprecedented challenges due to the high cost of gas. Which leads people to wonder: What determines gas prices? Why have we seen gas and diesel prices jump higher? And what can the regular person do?
Let’s look at the factors that contribute to what you pay at the pump, with a little help from the U.S. Energy Information Administration.
1) Price of Crude Oil
Gas and diesel are products derived from crude oil. Crude oil is the unrefined oil that is extracted from the ground. In this form, the oil contains a non-renewable mixture of hydrocarbons, sulfur, nitrogen, oxygen, and small amounts of metals and salts.
There are different categories of crude oil as well, from light crude oil, which has high API gravity and low viscosity, almost like vegetable oil; intermediate crude oil, which has medium API gravity and medium viscosity; and heavy crude oil, which has low API gravity and high viscosity, more like molasses.
The price of crude oil is affected by supply, demand, and geopolitics. With the ongoing conflict involving the United States and Iran, crude oil prices have been heavily impacted, which in turn affects the price you pay at the pump. Crude oil remains one of the largest contributors to the price of regular gasoline, according to the U.S. Energy Information Administration.
2) Refining Costs
Another factor that contributes to gas prices is the refining process of crude oil. Crude oil isn’t only responsible for gasoline and diesel; there are other products that depend on it too, from butane to even jet fuel. It’s the refining process that separates crude oil into usable petroleum products.
All refineries follow three basic steps: separation, conversion, and treatment.
In an example provided by the U.S. Energy Information Administration, they explain that the refinery process is similar to what happens when popcorn gets popped. A 42-gallon barrel of crude oil typically yields about 45 gallons of petroleum products in U.S. refineries because of something known as processing gain.
Refining costs can also be broken down into refinery equipment, processing, and, of course, labor. These costs represent a significant portion of the total price you pay at the pump and can change depending on market conditions, refinery capacity, and demand.
3) Distribution and Marketing
Distribution costs account for the transportation and delivery of gasoline to gas stations. This category also includes many of the operating and marketing costs associated with running each gas station.
Although distribution and marketing generally make up a smaller portion of the overall price compared to crude oil and refining, these costs still contribute to the final gasoline or diesel price you see at the pump.
4) Federal and State Taxes
Finally, we have federal and state fuel taxes, which account for another portion of the total price you pay.
The federal gasoline tax has been 18.4 cents per gallon since 1993, while the federal tax on diesel is 24.4 cents per gallon. Federal fuel taxes help fund highway maintenance and other transportation infrastructure costs. State fuel taxes can vary significantly depending on where you and your business are located.
Energie Fuel is in California, so we’ll use the State of California as an example since we wrote an article about this earlier this summer.
On July 1, 2026, the State of California increased the gasoline excise tax from 61.2 cents to 63.4 cents per gallon. The diesel excise tax rose from 46.6 cents to 48.2 cents per gallon.
These fuel tax increases aren’t new for California residents, since the state’s gasoline and diesel excise tax rates are adjusted each year on July 1. Revenue generated from fuel taxes helps fund critical transportation and infrastructure projects.
These are the four major factors that determine gas prices, but keep in mind that the most recent increase in fuel prices is largely influenced by the ongoing geopolitical conflict involving the United States and Iran.
For businesses running a fleet, we recommend enrolling in the Energie Fuel Card program, which is designed to support fleets of all sizes across a wide range of industries. The program features no setup fees, no monthly or annual fees, and no transaction fees.
Additionally, the Energie Fuel Card provides exclusive access to wholesale fuel sites, also known as Cardlock stations, which are specifically designed for businesses, fleets, and commercial drivers. By consistently fueling at wholesale locations, businesses can significantly reduce their overall fuel expenses.
Our second and most strongly recommended strategy is to make the switch to fueling exclusively at wholesale sites whenever possible. While retail fuel stations offer convenience, they typically come with higher fuel prices, and those additional costs can quickly add up for businesses operating multiple vehicles.
In contrast, Cardlock stations provide access to wholesale fuel pricing that is not available to the general public. In many cases, fueling at a Cardlock station can reduce fuel costs by approximately $0.15 to $1.00 per gallon compared to traditional retail stations.
If you’re unsure where to find a Cardlock station, Energie Fuel has made the process simple with convenient station maps that can be accessed directly through Google Maps.
Ultimately, while high gas and diesel prices are certainly felt at the pump by everyone, businesses can take proactive steps to minimize their impact by making smarter fueling decisions all year round.
Energie Fuel is committed to helping businesses reduce fuel costs, improve efficiency, and navigate changing fuel market conditions with confidence.