No matter where you live, the cost of filling up your car with gasoline has increased in recent months, which has some consumers asking: "What's causing this spike in gas prices?"

A number of factors help dictate the price of gasoline, but the cost of crude oil on the global marketplace is the main component, and crude oil prices have been steadily rising. With current economic conditions improving worldwide, global demand for oil is rising, leading to the higher prices we're seeing today.

Gasoline prices are also affected by other factors, including weather events, inventories, refining and distribution costs, marketing and taxes. For example, every time U.S. motorists pull up to the pump, they pay an average of 48 cents in state and federal taxes per gallon of gasoline.

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In today's episode, I interview API's Downstream and Industry Operations Group Director Bob Greco about the Environmental Protection Agency's (EPA) decision regarding the amount of ethanol permitted in gasoline. Use the audio player below to listen to information about the article and follow along with the show notes. I hope you find the podcast informative.

00:16 Nearly every gallon of gasoline sold in America today contains ethanol. This alcohol fuel is made primarily from corn here in the United States and blended into gasoline in accord with federal guidelines. Gasoline containing no more than 10 percent ethanol has been in the marketplace for several years. But recently the Environmental Protection Agency (EPA) decided to allow fuel containing up to 15 percent ethanol to be s... more »

Gasoline prices rose to their highest level in the past two years yesterday. According to AAA, the average price of gasoline climbed one penny Dec. 29 to $3.071 per gallon. This is the highest level since October 15, 2008, when the average price of gasoline reached $3.084.

If you've been reading this blog, you're aware that the cost of crude oil is the largest factor in the price of gasoline. Between November 17 and December 28, crude oil prices increased 26 cents per gallon to $2.18 per gallon ($91.49 per barrel), which was the highest level in October 3, 2008, when the per-barrel price reached $93.88.

Demand for gasoline and diesel fuel also have climbed recently. Last month, according to API's Monthly Statistical Report, gasoline demand rose 3.2 percent over November 2009. Demand for Ul... more »

Did you know that the U.S. Environmental Protection Agency (EPA) has the authority to levy taxes? If you're scratching your head over this tidbit of information, you're not alone.

Here's the issue: A couple of weeks ago, the EPA determined that the amount of cellulosic ethanol that should be included in the nation's gasoline pool should be increased from five million to six million gallons in 2011. The goal is to ensure there is a market for this new fuel that is supposed to be made from switchgrass, wood chips, or other forms of cellulose-rich materials.

The problem is that there is virtually no cellulosic ethanol on the market today. The technology hasn't developed to the point where large quantities of this fuel can be produced.

Still, the oil and natural gas industry is expected to com... more »

"Stronger fuel demand tells us a recovery is underway." Those are the words of API's Chief Economist John Felmy today, describing the good news in API's Monthly Statistical Report for November. The report shows that U.S. petroleum deliveries (a measure of demand) climbed 6.5 percent last month over November 2009. The increase was the largest year-to-year increase for any month in 2010.

Deliveries of Ultra-Low Sulfur Diesel (ULSD) fuel--the type that is required for all on-road diesel vehicles, including trucks delivering goods--jumped by 13.2 percent in November. Gasoline deliveries rose 3.2 percent last month as compared to the same time period last year.

"Fuel demand continues to strengthen, a positive sign for our economy," John said. "Gasoline deliveries are up three months in a row an... more »