Federal Oil and Gas Industry Initiatives
Retail Gasoline Price Components
Michigan Petroleum Profile
Comparison Shopping
Fuel-Saving Tips
Travel Tools
Consumer Complaints
FAQs

Over the last few years, gasoline prices in the State of Michigan have fluctuated dramatically.  When prices rise suddenly, the Attorney General closely monitors wholesale and retail prices and has a team ready to respond to verified reports of price gouging. 

For example, with massive power outages impacting southeast Michigan and escalating reports of price gouging on August 13, 2003, the Attorney General proactively sent a legal team into metro-Detroit to look for price gouging.

This page explains the Attorney General's role in investigating rising gas prices and provides a helpful array of tools to help you gas up and still enjoy your travels. The first line of defense one has against rising gas prices is the power of the consumer's pocketbook.  Throughout, Attorney General Cox remains committed to fighting higher gasoline prices in court when those price increases violate the law.  If you become aware of direct evidence of a conspiracy between companies, please call the office at 877-765-8388 (toll free).

Federal Oil and Gas Industry Initiatives
 

 The Federal Trade Commission and the United States Department of Justice have substantially increased efforts to investigate gasoline pricing.  You can find more information by accessing http://www.ftc.gov/ftc/oilgas/index.html.

Retail Gasoline Price Components
 

The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits, of refiners, marketers, distributors, and retail station owners.  The Michigan Attorney General monitors retail and wholesale prices across the state every weekday.

Wholesale (Rack) Price.  This is the price the retail gas station owner must pay for the gas.  Another term for wholesale price is rack price.

State Road Tax.  Michigan's road tax is 19 cents per gallon.

Federal Taxes.  The Federal motor gasoline tax is 18.4 cents per gallon.

Michigan Sales Tax.  Michigan's sales tax is 6%.  Retail gas stations do not pay sales tax on the 19 cents per gallon state road tax included in the price of a gallon of gasoline but do pay on the federal tax of 18.4 cents.  The calculation of the state sales tax portion of the cost of a gallon of gasoline is complicated because the sales tax for gasoline, unlike the sales tax for other products, is already included in the posted retail price.  The ultimate total sales tax paid by the station is calculated by taking the retail price per gallon minus 19 cents (state road tax) divided by 17.67 (the denominator that accounts for the fact that sales tax is already included

in the posted retail price). 

Store Operating Expenses.  Store operating expenses per gallon are approximately 11 cents.  The components of this expense include credit card fees (4 cents per gallon), amortization of equipment (3 cents per gallon), and labor, utilities, insurance, maintenance, etc. (4 cents per gallon).  The credit card fee estimation is obtained from the National Association of Convenience Stores report that two-thirds of all gasoline transactions in 2005 were paid by credit card.  With fees averaging 2.6% of transaction cost, 4 cents per gallon represents the average for all gasoline sales.  The equipment amortization estimation is based on a seven year amortization of $300,000 of equipment, with the typical store selling 1.3 million gallons of fuel per year. 

Delivery and Distribution Charges.  Distributors charge delivery cost (2.5 cents per gallon) for delivering the gas from the wholesaler to the retail gas station and a distribution charge (2 cents per gallon) for their profit on each gallon of gasoline.

Evaporation Credit ($.005) and MUSTFA fee ($.00875).  Because gasoline evaporates, wholesalers receive an evaporation credit.  Wholesalers either pass part, all, or none of that evaporation credit on to retail gas stations.  The MUSTFA fee is a Michigan-specific environmental regulation fee for the refined petroleum fund.

Michigan Petroleum Profile

http://tonto.eia.doe.gov/oog/info/state/mi.html

Gas Price Comparison Shopping

Be an active consumer. Don't just pay the high price at the closest station. Shop around and find the most competitive price in town.

AAA Daily Fuel Gauge Report for Michigan:

http://www.fuelgaugereport.com/MImetro.asp

Gas Prices for the Detroit area:

http://www.detroitgasprices.com/

Gas Prices for the Grand Rapids area:

http://www.grandrapidsgasprices.com/

Gas Prices for the Lansing area:

http://www.lansinggasprices.com/

Gas Prices for the rest of Michigan:

http://www.michigangasprices.com/

Gas Price Info for U.S. and Canada:

http://gasbuddy.com/

Search Gas Price Info by Zip Code:

http://www.gaspricewatch.com/usgas_index.asp

Fuel-saving Tips

Follow these tips and guidelines to make sure your vehicle is getting the best gas mileage possible.

Fuel-saving driving tips from the FTC:

http://www.ftc.gov/bcp/conline/pubs/alerts/fuelalrt.htm

Fuel-saving driving tips from AAA: 
http://www.autoclubgroup.com/michigan/autos/
car_maintenance/articles.asp?articleID=9&sectionID=1

Gas Mileage Tips from fueleconomy.gov:

http://www.fueleconomy.gov/feg/drive.shtml

More fuel-saving tips:

http://www.mpgplus.com/,

http://www.auto-buying-tips.com/tips/gas_mileage_tips.htm
http://www.autoeducation.com/articles/gas_saving_tips.htm 
http://couponing.about.com/cs/auto/ht/htsaveongas.htm

Travel Tools

Plan your trip efficiently and consider taking advantage of the many travel options within Michigan to save on fuel costs.

AAA Trip Fuel Cost Calculator:

http://www.fuelcostcalculator.com/

Michigan Tourism Info for planning trips closer to home:

http://travel.michigan.org/,

http://www.yesmichigan.com/,

http://www.destinationmichigan.com/v3/,

http://www.mlive.com/travel/

Make reservations for Michigan Campgrounds and Harbors:

http://www.midnrreservations.com/

Consumer Complaints

Report price-fixers and gas-gougers.

Report evidence of price-fixing or gas?gouging to Attorney General Mike Cox:

Call 1-877-765-8388

Report excessively high gas prices to U.S. Department of Energy:

http://gaswatch.energy.gov/

Frequently Asked Questions
 

Question:  When the price of gasoline increases dramatically, who is it that benefits from the price increases?

Answer:  The Attorney General's office daily reviews retail profit margins and actual cost of providing gasoline products to the consumer throughout the State of Michigan.  Historically, gas retailers (i.e. corner gas station owners) have not appeared to profit from high prices.  Instead, high profits have been extracted by refiners and producers farther up the supply chain.

Question:  Why do gas prices keep fluctuating?

Answer:  Many factors play a role in the cost of a gallon of gasoline, including the cost of crude oil, refinery processing, transportation, distribution, marketing, operating expenses, retail station operations, and taxes.  The prices we pay at the pump reflect these costs, as well as the profits (or losses) of refiners, marketers, distributors, and retail station owners.  Other factors that have also historically affected gas prices include: (1) increasing demand, (2) a historical drop in U.S. refinery capacity, (3) a downward trend in how much gasoline is held in inventory, and (4) regulatory factors.  Recently, we've seen record high prices for crude oil.  Some analysts have attributed this spike to a number of additional factors, including current economic conditions here in the United States and weakness in the U.S. dollar.

All told, there are numerous factors that affect both the general upward trend in gasoline prices and the daily fluctuations we experience.  Efforts to monitor these factors continue in this office.  Additionally, given the national scope of this issue and its impact on the U.S. economy, the various federal agencies that have oversight and enforcement authority in this area, as well as your representatives in Congress, continue to watch the issue closely and formulate responses.  For example, Congress recently enacted the Energy Independence and Security Act, which gives the Federal Trade Commission new authority to police market manipulation in the petroleum industry.  This is one of many steps that have been undertaken to monitor these markets and prevent unwarranted high prices.  However, as experience has demonstrated, there are always a myriad of factors that contribute to the price we pay for gasoline.

Question:  What can the Attorney General's office do to promote price competition in the gasoline industry and protect consumers?

Answer:  Attorney General Cox is concerned about the effect that high gas prices in Michigan have on the consumer, the State's tourism industry, and the overall health of the state economy.  The Attorney General believes that the key to protecting consumers in Michigan is the promotion of healthy, vigorous competition among as many different petroleum refiners, marketers, and retailers as possible.  To protect competition in the marketplace, the Attorney General can take action under various antitrust laws.

The Attorney General may also file suit against retailers for "price gouging."  Under the Consumer Protection Act, a retailer may not charge a price that is "grossly in excess of the price at which similar property or services are sold."  The Attorney General's office monitors gas prices daily and immediately investigates price-gouging claims.  During 2003 - 2005, frequent daily price swings of 30 - 40 cents per gallon were common due to international events, natural disasters, industrial accidents at refineries, and other causes. 

Question:  What if all of the gas stations in a certain geographic area raise their prices by the exact same amount on the same day?  Isn't this price fixing?

Answer:  Retailers are free to independently determine what they should charge for gasoline.  Retailers in similar geographic areas often price match, therefore, the cost of gasoline appears to rise or fall at the same time.  If they explicitly agree together to raise or lower prices, such an agreement is illegal under state and federal antitrust law.  However, numerous court decisions have held that gas station retailers may respond to the price changes of other retailers by unilaterally "matching" their price changes.  Without proof of an actual, explicit agreement, the fact that stations match each other's price increases is not illegal.

Question:  What should I do if I feel there has been price fixing or gas gouging?

Answer: Attorney General Cox remains committed to fighting higher gasoline prices in court when those price increases violate the law.  If you become aware of direct evidence of a conspiracy between companies, or have verifiable evidence of a retailer charging a price "grossly in excess of the price at which similar property or services are sold," please contact the Attorney General's Consumer Protection Division:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909

Phone: 517-373-1140

Toll-free within Michigan: 1-877-765-8388
Fax: 517-241-3771
www.michigan.gov/ag (online complaint form)