Gasoline Price

Gasoline (also spelled gasolene) is a liquid produced from crude oil, also called petroleum, and used especially as a fuel for internal-combustion engines, commonly called petrol engines.

 

Quick Overview of Gasoline

✔️A description of gasoline and related subjects
✔️The production of gasoline
✔️Ways to trade gasoline as a commodity
Factors influencing the price of gasoline as a commodity
Uses of gasoline
Interesting facts about gasoline

 

A description of gasoline and related subjects

 

What are petroleum and crude oil?

Petroleum is one of three fossil fuels, natural gas and coal being the other two. It formed during the Carboniferous Period, which ran approximately 360 to 286 million years ago.

Petroleum contains numerous hydrocarbons. It has formed from animal and plant debris in sedimentary beds deep beneath the surface of the Earth. This process happened over a period of millions of years.

Deep beneath the surface of the Earth, pressure is extremely high, causing the petroleum to seep out from the sedimentary beds upward through porous rock (limestone and sandstone) until it reaches rocks (shale or dense limestone) that are impermeable.

In this way, petroleum deposits came to be collected in reservoirs, which can be several hundred metres below the Earth’s surface.

Petroleum may occur in gaseous, liquid, or near-solid phases, either in isolation or in combination. Hence, petroleum is typically used as a term to describe fossil fuel in gas, liquid, and solid state.

Furthermore, the term crude oil is used to describe fossil fuel excluding the gas component in petroleum. Put differently, ‘except the gas component in the petroleum, the rest of the mixture is known as crude oil,’ according to Difference Between.com.

The terms ‘petroleum’ and ‘crude oil’ are sometimes used interchangeably, while ‘petroleum’ is also used as a more general word to refer to crude oil, the raw oil that is extracted from the ground.

 

Two different terms for the same type of fuel

In addition to gasoline, the term petrol is also used for the fuel used in internal-combustion engines. Petrol and gasoline are actually the same things, only different words.

In the Americas, comprising North, Central, and South America, the term ‘gasoline’ is used. The term ‘petrol’ is used in the United Kingdom (UK), in Commonwealth countries such as India, Pakistan, South Africa, Australia, and New Zealand, to name a few, as well as in certain Asian countries. Although a member of the Commonwealth, Canada prefers the term ‘gasoline.’

Interestingly, the largest petroleum companies in Nigeria refer to gasoline as ‘premium motor spirit.’ ‘Although “petrol” has made inroads into Nigerian English, “premium motor spirit” remains the formal name that is used in scientific publications, government reports, and newspapers, according to Wikipedia.

Petrol is short for petroleum, just like gas is the short form of gasoline.

The term petroleum derives from two Latin words, petra (‘rock’) and oleum (‘oil’). The term gasoline is a combination of the following components:  gas, ol (probably representing oleum, which is the Latin for oil), and the chemical suffix- ine.

 

Features of gasoline

• It is a transparent liquid.
• Gasoline is a volatile liquid, implying it evaporates quickly at room temperature.
• It has a low boiling point. ‘Gasoline used in automobiles boils mainly between 30° and 200° C (85° and 390° F), according to Encyclopaedia Britannica.
• Gasoline is highly flammable.
• It is a mixture of hundreds of different combustible hydrocarbons, which comprise only two elements, namely hydrogen and carbon.
• It is a hazardous liquid, able to explode when an electric spark lights it. Also, it is harmful to drink it.
• It creates poisonous gases such as carbon monoxide.
• Gasoline has a density of 755 kg/m³.
• It contains carcinogens which are substances that can cause cancer.
• The flashpoint of diesel is about minus 45 degrees Celsius (minus 49 degrees Fahrenheit). A flammable liquid’s flashpoint indicates the temperature at which the liquid vaporises or is able to ignite.

 

What type of commodity is gasoline?

Commodities refer to goods that are interchangeable with other goods, meaning they can be bought, sold, or traded.

Furthermore, commodities are classified into different groups such as:

• Agricultural, including wheat, corn, wool, coffee, and tea.
• Livestock, comprising, amongst others, beef, feeder cattle, live cattle, and lean hogs.
• Industrial, contain commodities such as bitumen, aluminium, zinc, and tin, to name a few.
• Metals include gold, silver, copper, iron ore, and platinum.
• Energy is comprised of commodities like crude oil, uranium, heating oil, ethanol, and gasoline.

As an energy commodity, crude oil (from which gasoline is obtained) is a non-renewable resource, implying it cannot be replaced naturally. Therefore, it is regarded as a limited resource. Similar to other energy commodities, crude oil has an enormous impact on economies, households, and the lives of humans.

Several analysts consider the idea to refer to gasoline as an energy currency.

 

The production of gasoline

Gasoline is produced as a by-product of crude oil, which is extracted from oil reservoirs beneath the surface of the Earth through oil drilling, which is a process where petroleum companies dig deep well bores into the oil reserves and pump the crude oil out.

Countries with the largest oil reserves

In 2019, the following countries had the largest oil reserves:

1. Venezuela – 304 billion barrels
2. Saudi Arabia – 298 billion barrels
3. Canada – 170 billion barrels
4. Iran 156 – billion barrels
5. Iraq – 145 billion barrels
6. Russia – 107 billion barrels
7. Kuwait – 102 billion barrels
8. United Arab Emirates (UAE) – 98 billion barrels

More than 80 percent of the world’s oil reserves are concentrated in ten countries, largely in petroleum reservoirs in Middle East countries.

 

Largest global producer of gasoline

The United States of America (USA) remains the largest producer of gasoline in the world.

 

Processing gasoline

After its extraction, crude oil is taken to a refinery where it is refined and processed into a variety of products, including gasoline, diesel fuel, jet fuel, kerosene, and numerous other products.

Most refineries use fractional distillation in which the crude oil is separated into different parts, referred to as fractions, which have their own particular molecular compositions, boiling points, and weight.

Fractional distillation works basically as follows:

• Vapours from a boiling solution are moved along a fractionating column, which is covered with ‘plastic or glass beads to improve the separation by providing more surface area for condensation and evaporation,’ as explained by ThoughtCo.
• The temperature of the column gradually drops along its length, allowing components with a higher boiling point to condense on the column and return to the solution. Components with a lower boiling point – which are more volatile – move through the column and are extracted near the top.

A brief description of the fractional distillation of crude oil:

• At the molecular level, crude oil consists of groups of hydrogen and carbon molecules, called hydrocarbon groups (chains), which vary in length. A fraction of crude oil is a group of hydrocarbon molecules of similar size with similar boiling points. The longer the length of the fraction, the higher its boiling point.
• The distillation process takes advantage of these differing boiling points to remove the various distillates from the crude oil.
• Crude oil is heated to over 400 degrees Celsius, causing the oil to transform from a liquid to a vapour. Different fractions (hydrocarbons with comparable numbers of carbon atoms) condense at certain temperature ranges. Longer hydrocarbon chains, with a boiling point exceeding 400 degrees Celsius, are the first to transform from vapour to a liquid state. These fractions are removed from the fractionating column (tower) as bitumen.
• As the crude oil vapour continues to move higher in the column, shorter hydrocarbon chains begin to change to liquid as they reach their boiling points.
• When the vapour reaches about 150 degrees Celsius, the fractions of crude oil that constitute gasoline start to change into a liquid state. The gasoline begins to accumulate on the distillation plates in the column and is channelled into a holding tank.

 

Following the distillation process, the raw fuel is blended with additives to improve the quality of the gasoline and to make it ready for consumer use. Gasoline is highly volatile; hence, its volatility rate is controlled by blending it with butane.

Also, environmental agencies in certain countries require the addition of additives that reduce emissions and improve mileage. For instance, in the USA, the Environment Protection Agency (EPA) specifies that ethanol is to be added to the gasoline to boost the octane level and to meet the EPA’s requirements for oxygenated (smog-reducing) fuels. Gasoline with 10% ethanol is required for use in automotive vehicles.

The mixture of 90 percent unleaded gasoline and 10 percent ethanol is called gasohol.

The EPA states that ‘gasoline blends differ, and therefore actual energy content varies according to the season and producer by up to 4% more or less than the average.’

The refined gasoline is transported from the refineries via pipelines, ships, railways, and a network of trucks to terminals of the oil and gas companies. It is at the terminals that the companies add detergents and their own specific additives to formulate their own unique high-quality blends, differentiating their products from those of other petroleum companies.

Finally, the gasoline is loaded into fuel tanker trucks for delivery to service stations all across the country.

 

 

Ways to trade gasoline as a commodity

There are several ways to trade gasoline as a commodity, specifically RBOB gasoline. RBOB is the acronym for ’Reformulated Gasoline Blendstock for Oxygenate Blending.’

Ways to trade include:

• Gasoline futures are available on the New York Mercantile Exchange (NYMEX). The futures are traded in units of 42 000 gallons (1 000 barrels) of RBOB gasoline per contract.
• Gasoline exchange-traded funds (ETFs), such as the United States Gasoline Fund.
• Gasoline options.
• Gasoline contracts for difference (CFDs).
• Shares of companies involved in the extracting, refining, and selling of crude oil and crude oil products.

 

A well-respected and regulated commodity broker like AvaTrade can provide more information about the trading instruments mentioned above. AvaTrade also offers trading educational tools, enabling traders/investors to make trading decisions, as well as a ‘range of high-end customizable trading platforms.’

Furthermore, AvaTrade will answer questions such as:

• Is it better to trade crude oil or gasoline?
• What is the best strategy for trading gasoline?

 

Factors influencing the price of gasoline as a commodity

There are various factors that determine the price of gasoline (petrol). As is the case with other energy commodities, gasoline prices are determined largely by the law of supply and demand.

Other key factors include:

• The actual cost of crude oil

Crude oil (the most widely traded commodity in the world) is used to produce gasoline, making it a crucial role player in determining gasoline prices. There is a high correlation between crude oil pricing and the prices of gasoline (petrol). The price of crude oil accounts for more than 50 percent of the price of gasoline.

Geopolitical factors also affect the price of crude oil. For instance, the Russian war in Ukraine which started on February 24, 2025, had a tremendous impact on the price of crude, causing the price of gasoline (petrol) in numerous to reach record high levels.

Another factor influencing the cost of crude oil is the power exercised by the Organisation of the Petroleum Exporting Countries (OPEC). A recent example of OPEC wielding its power to influence crude oil’s price is its decision to reduce oil production by 2 million barrels per day from November 2025. This decision was taken by the OPEC members and non-OPEC allies, a group called OPEC+.

 

• Refining costs

Refining costs refer to costs involved in the refining process where gasoline is produced as a by-product of crude oil.

These costs are determined by the type of gasoline being produced from crude oil. Refineries charge more for higher octane gasoline, with premium grade the most expensive.

Further, refining costs also depend on the processing technology available in refineries and the impact of extreme weather conditions, especially where refineries are located in coastal areas.

Another consideration is the refinery mix, which is an indication of how much gasoline is being refined compared with other products such as kerosene, diesel fuel, and heating oil.

 

• Distribution

Gasoline (petrol) is transported from refineries via, inter alia, oil tankers, and pipelines to countries and regions. Distance and travel time affect the price of gasoline. For instance, in South Africa, the Basic Fuel Price (BFP) is ‘based on what it would cost a South African importer to buy petrol from an international refinery and to transport the product onto South African shores.’

Regarding gasoline (petrol) prices at pumps at service stations, taxes and/or levies are also added by governments. In South Africa, the petrol price indicated on petrol pumps include, amongst others, the following levies: government levy (approximately 20 percent of the retail price), road accident levy (about 11 percent), and retail levies.

 

Uses of gasoline

Gasoline was considered a useless by-product of petroleum until 1885 when Karl Friedrich Benz (1844 – 1929), a German inventor and engineer, designed and developed the world’s the first car powered by an internal-combustion engine.

Nowadays, gasoline is used as fuel for internal-combustion engines due to its high energy of combustion and ability to mix readily with air in a carburettor.

Gasoline is used as fuel in vehicles such as motor cars, light-duty vehicles, motorcycles, and recreational vehicles. It is estimated that approximately 47 percent of each barrel of crude oil is used to produce gasoline for cars and light-duty vehicles.

Boats and small aircraft are propelled by gasoline.

It is used in equipment and tools in gardening (lawn movers and chainsaws), farming, forestry (chainsaws), and construction.

Gasoline is also used in portable generators, generating electricity when there are electrical blackouts or loadshedding in a country like South Africa.

It is also used as a solvent for oils and fats.

 

• Major consumers of gasoline

The USA is the largest consumer of gasoline in the world, accounting for about 44 percent of global consumption. Other large consumers of gasoline are China, Japan, Russia, Mexico, and Brazil, to name a few.

 

Interesting facts about gasoline

• Approximately 72.2 litres (19 US gallons) of gasoline can be refined from a barrel of oil, which consists of about 159 litres (42 US gallons) of crude oil. A barrel of oil weighs about 136 kilograms.
• Gasoline (petrol) is available in different octane ratings, also known as octane numbers. An octane rating is an indication of the quality or performance of the gasoline. The higher the octane rating, the higher the amount of octane in the fuel and the better the performance of the fuel within a vehicle’s engine. For example, in South Africa, 93-octane petrol (gasoline) is recommended at high altitudes and 95-octane gasoline at low altitudes.
• Gasoline vapours are heavier than air, causing them to settle on the ground and flow like a liquid. This feature enables gasoline vapours to enter drains, basements, and sewer lines.
• With its introduction, Ford’s Model T car got a gasoline mileage of approximately 25 miles per US gallon. In terms of the metric system, 10.58 kilometres per litre.
• Gasoline derives its distinctive smell from benzene, a substance that increases octane levels, improving fuel efficiency.
• In 1922, Thomas Midgley Jr, a General Motors engineer, discovered the effectiveness of tetraethyl lead (TEL) as an antiknock additive for gasoline, improving the performance of vehicle engines. The first gallon of leaded gasoline was sold at a filling station in Dayton, Ohio in the USA, in February 1923.
• TEL is a highly toxic compound that was already discovered in 1854
• Lead is poisonous to humans, causing lead poisoning and severe neurological damage. In 2010, Time magazine called leaded gas as ‘one of the worst inventions of all time.’ (Accentuation in the quote is by the article writer.)
• However, it was only at the end of August 2025 that the United Nations Environment Programme (UNEP) declared that ‘lead has finally been phased out of all global gasoline use,’ according to Grist, an American non-profit online magazine that publishes environmental news and commentary. The UNEP announced the good news almost 100 years after the introduction of leaded gasoline.

 

Note: This article does not constitute investment, financial, or trading advice. Please obtain the advice of a professional and regulated commodity broker before making trading and investment decisions.