Video: When it comes to gas prices, it's location

By Bob Faw Correspondent
NBC News
updated 5/16/2005 7:47:29 PM ET 2005-05-16T23:47:29

Why is some of the cheapest gas in America in the Scandinavian stronghold of Lindstrom, Minn.? Why, in a San Francisco suburb, does gas cost $1.30 a gallon more?

It’s maddening — and fluid. Recently, pump prices in Lindstrom for the same gasoline went up and down four different times in the same day.

Prices flip flop so station owners can beat the competition. But they gyrate at the New York Mercantile Exchange for other reason. Traders like Eric Bolling say the price of crude oil has surged because demand — especially in China and India — has surged.

“As the demand goes, so does the price of oil and gasoline,” says Bolling.

Roughly half of what you pay in America — 44 percent — is determined by the price of crude oil; another 15 percent is for what it costs to refine that oil and get it to you.

Energy expert Seth Kleinman says the greater distance gasoline is shipped, the more it tends to cost.

“That’s why gasoline tends to cost less the closer you are to the Gulf Coast, because that’s about where half the gasoline in the United States is produced,” says Kleinman.

Regardless of where you fill up,nearly a third of what you pay at the pump is taxes: Federal and state. The higher those taxes, the more money there is to fix roads.

How are the roads in Lindstrom, where gasoline taxes are lower?

“Not real great right now,” says resident Betsy Sandgren.

So, you get what you pay for. And while some costs — crude oil, distribution, taxes — change, some things do not. 

“You’re at the mercy of the pump,” saysanother Lindstrom resident.

Even in Lindstrom, where the grass is supposedly greener.

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