ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -According to the latest Energy Information Administration data, the cost of crude oil accounts for the majority (54%) of the retail price of regular gasoline. Refining makes up 18%, distribution and marketing 17%, and taxes 11%.

Detailed explanation-2: -Moreover, the monthly changes in oil prices and gasoline prices (not shown) also are very highly and positively correlated. So, when oil prices spike, you can expect gasoline prices to spike as well, and that affects the costs faced by the vast majority of households and businesses.

Detailed explanation-3: -Crude oil prices are a major component of the price that we pay for gasoline (or diesel) at the pump, as shown below. Other factors include the cost of refining crude oil into gasoline; the distribution and marketing of gasoline; and federal, state, and local taxes on gasoline.

Detailed explanation-4: -Petroleum refinery inherently possess high risk of fire and explosion due to processing and storing highly flammable material. Crude oil is blend of number of hydrocarbons itself hazardous due to its flammability property and toxic contents. In refinery process, the high temperature and pressure adding the risk.