Gasoline cost more in September 2026 than in any September on record, and it is still far above last year’s level even after a small dip this week. Here is what actually goes into the price on the pump sign, and how to see what it means for your own budget.
Key takeaways
- The U.S. average for regular gasoline was $4.354 a gallon in the week of October 5, about $1.23 more than a year earlier, according to the Energy Information Administration (EIA).
- A gallon’s price has four main parts: crude oil, refining, distribution and marketing, and taxes. Crude oil is usually about half.
- You can estimate your own exposure with one simple formula: gallons you buy per year × the change in price.
The news in brief
The EIA’s weekly survey, released on October 6, put the national average for regular gasoline at $4.354 per gallon, all taxes included. That was 11 cents lower than the week before but $1.23 higher than a year ago. Diesel averaged $6.199, up $2.49 from a year earlier.
AAA, which tracks prices at stations every day, reported that September 2026 averaged $4.33 a gallon, 50 cents above the previous September record set in 2023. Its daily national average stood at about $4.37 on October 7. Prices also vary a lot by place: AAA’s October 1 survey showed California at $6.40 and Indiana at $3.81.
Higher fuel costs feed into the wider cost of living, which is why they show up in the inflation numbers we explained in What inflation is and why a 4.9% reading hits your wallet.
The basic idea, explained
Think of a gallon of gasoline like a loaf of bread at the supermarket. The price on the shelf covers the wheat (the raw material), the bakery that turns it into bread, the truck and the store that get it to you, and any sales tax. Gasoline works the same way:
- Crude oil. The raw material. Its price is set on world markets and reacts to supply, demand and global events. It is the biggest and most volatile part.
- Refining costs and profits. Refineries turn crude oil into gasoline. When refineries shut down for maintenance or outages, this slice can jump.
- Distribution and marketing. Pipelines, trucks, storage and the gas station itself, including its margin.
- Taxes. The federal tax is 18.4 cents per gallon, and state taxes and fees averaged about 33.6 cents per gallon as of January 2026, according to the EIA.
Here is how the EIA breaks down the average price of regular gasoline in 2025, which was $3.10 a gallon:
| Component | Share of price (2025) | Approx. amount per gallon |
|---|---|---|
| Crude oil | 51.4% | $1.59 |
| Distribution and marketing | 17.8% | $0.55 |
| Taxes (federal and state) | 16.6% | $0.51 |
| Refining costs and profits | 14.3% | $0.44 |
Two things follow from this. First, because crude oil is about half the price, big swings in oil markets show up at the pump within days or weeks. Second, taxes are mostly a fixed number of cents per gallon, not a percentage. So when the pump price rises, the tax part does not grow with it; almost all of the increase comes from oil, refining and distribution.
A handy rule of thumb: a barrel of oil holds 42 gallons. So if crude rises by $10 a barrel, the raw-material cost of each gallon rises by about $10 ÷ 42 ≈ 24 cents, before any other changes.
A worked example
Let’s take a household that drives 12,000 miles a year in a car that gets 25 miles per gallon. These are round illustrative numbers; use your own.
- Gallons per year: 12,000 ÷ 25 = 480 gallons.
- A year ago: the EIA average was about $4.354 − $1.230 = $3.124. Cost: 480 × $3.124 = $1,499.52 a year.
- Today: 480 × $4.354 = $2,089.92 a year.
- Difference: $2,089.92 − $1,499.52 = $590.40 a year, or about $49.20 a month.
Now look at the tax piece. Federal plus average state tax is about 18.4 + 33.6 = 52 cents a gallon. At $3.12 that was roughly 17% of the price; at $4.35 it is only about 12%. The tax in cents barely moved, so nearly all of the extra $590 came from the other three parts of the price.
The same formula shows why fuel efficiency matters. A car that gets 35 miles per gallon would use about 343 gallons for the same 12,000 miles (12,000 ÷ 35), so the same $1.23 rise would cost about 343 × $1.23 ≈ $422 a year instead of $590.
What you can do
- Do the math for yourself. Check your odometer or fuel receipts for one month, then multiply gallons by the price change. Knowing the real number makes budgeting easier than guessing.
- Treat fuel as a variable budget line. Instead of using last year’s figure, budget using a recent average price, and review it monthly.
- Compare local prices. Prices can differ by many cents a gallon within the same area. Price-comparison apps and station websites can help.
- Cut gallons, not just cents. Combining errands, keeping tires properly inflated and driving at steady speeds all reduce the number of gallons you buy.
- Keep a cushion. Price spikes are a good reason to hold some savings for surprises; see What a weak jobs report means for your emergency fund.
This is general information, not financial advice.
Key terms
- Crude oil: unrefined petroleum pumped from the ground and traded worldwide, usually priced per barrel (42 U.S. gallons).
- Excise tax: a tax charged as a fixed amount per unit (here, cents per gallon) rather than as a percentage of the price.
- Refining margin: the difference between what a refinery pays for crude oil and what it earns selling gasoline and other products; it covers costs and profit.
Sources
- U.S. Energy Information Administration: Gasoline and Diesel Fuel Update (week of October 5, 2026)
- U.S. Energy Information Administration: Factors affecting gasoline prices
- AAA: National Average Dips Following Record-Setting September (October 1, 2026)
- AAA Gas Prices: daily national average
Written by The Daily Economy editorial team with AI assistance and checked against the sources above. Read our editorial policy.