What makes up the price at the pump
Crude oil, refining, distribution and tax: four layers that stack up differently in every country.
- Every pump price stacks four layers: crude, refining, distribution and tax.
- Crude oil sets a rough floor most countries share; tax is what usually explains the rest of the gap.
- A price change doesn't always mean oil got more expensive. It could be tax, currency, or a scheduled revision.
- We show the total price, not the layer-by-layer split, since that breakdown isn't part of the underlying data.
Four layers, every country
Every pump price is built from the same four layers, whatever country you're in: the crude oil itself, the cost of refining it, distribution and margin, and tax. What changes from country to country is how big each layer is, not whether it's there.
Illustrative shares only. Real shares change with tax policy and the current cost of oil.
What each layer covers
The four layers of a pump price:
Two countries buying crude at close to the same world price can still end up with very different pump prices, because refining costs, distribution and, above all, tax stack on top of that shared starting point.
Crude oil, refining and distribution
Crude oil is priced on world markets against a benchmark, commonly Brent crude, so every country's raw material cost moves with the same global swings. Refining turns that crude into finished petrol or diesel, and its cost depends on how much refining capacity a region has and whether it needs to import finished fuel rather than crude.
Distribution and the retailer's own margin add the cost of getting fuel from a refinery to a pump, plus a markup. This is usually the smallest of the four layers, though it can be larger in remote or low-volume markets.
See Brent crude explained →Tax: the layer governments control
Tax is the layer set entirely by national policy rather than by markets, and it's usually where the biggest country-to-country differences come from. It has two parts: excise duty, a fixed amount per litre, and VAT, a percentage charged on top.
Because duty is fixed in money terms, it becomes a bigger share of the price when the pre-tax cost is low, and a smaller share when oil prices rise.
See how excise duty works →Why the pump price lags the oil price
A move in the world oil price doesn't show up at every pump on the same day, for a few reasons.
Compare a country's weekly change against oil market news to see how much of a move is duty, currency or crude.
Common mistakes to avoid
A short list of the errors that most often come from thinking about price composition too casually.
Understanding the full fuel price breakdown
When drivers ask "what determines petrol prices," the answer lies in the interaction of four layers, each of which responds to different forces. The crude oil vs pump price relationship is not one-to-one — crude oil typically accounts for 35-55% of the final pump price depending on the country's tax regime. The remaining 45-65% comprises refining margins, distribution and marketing costs, excise duty, and VAT. This is why pump prices can diverge significantly from crude oil price movements: a $10/barrel drop in Brent may reduce the pump price by only 3-5 pence per litre in a high-tax market like the UK, because the fixed excise duty (57.95p/litre) and percentage-based VAT (20%) make up the majority of what consumers pay.
Fuel distribution costs cover the expense of moving refined fuel from the refinery gate to the retail forecourt — pipeline transport, terminal storage, road tanker delivery, and the logistics of managing a just-in-time fuel supply chain. In densely populated areas with nearby refineries or import terminals, distribution costs are relatively low (1-3 pence per litre). In remote or island locations, distribution costs can exceed 5-10 pence per litre due to longer tanker routes and smaller delivery volumes. The UK government publishes weekly data showing the spread between refinery gate prices and retail pump prices, which captures distribution and retail margins.
The fuel retail markup — what the petrol station operator earns per litre — is typically the smallest component of the pump price: approximately 3-7 pence per litre in the UK and 2-5 euro cents in continental Europe. This thin margin explains why fuel retailing is increasingly a loss-leader for convenience store sales (where supermarket forecourts dominate) and why independent stations in low-volume rural locations face viability challenges. The difference between wholesale vs retail fuel prices encompasses both distribution costs and this retail margin. The EU Oil Bulletin tracks wholesale and retail prices across all EU member states weekly, and the EIA gasoline and diesel fuel update provides equivalent US data.
Questions and answers
Does OpenVan.camp or your site publish the tax breakdown for each country?
No. We show the total national average price, with its date and sources, but the crude, refining, distribution and tax split isn't part of that data. Figures in this guide are illustrative, not a per-country dataset.
Why did a country's price jump overnight with no change in oil markets?
Some countries reset prices on a fixed cadence, which is exactly what a government-fixed price does. A tax change or subsidy adjustment can also move the pump price without any change in the crude market.
Is the split the same for petrol and diesel?
Not always. Diesel often carries a different duty rate and may be subsidised separately, so the crude-refining-distribution-tax split can look quite different for diesel versus petrol in the same country. The IEA Energy Prices database tracks end-use fuel prices including tax components across member countries.
How are fuel prices calculated from crude oil to the pump?
Fuel prices are built in layers: (1) crude oil cost — refineries buy crude at the Brent or WTI benchmark price; (2) refining margin — the refinery's cost and profit to convert crude into finished fuel; (3) distribution and retail margin — transport from refinery to forecourt plus the station's markup; (4) taxes — excise duty (fixed per litre) plus VAT (percentage). Each layer is set by different forces: crude by global markets, refining by capacity constraints, distribution by logistics, and taxes by government policy. The EIA provides a clear US breakdown, and the EU Oil Bulletin covers European markets weekly.
Why is the crude oil price different from the pump price?
Crude oil is only one component of the pump price — typically 35-55% before taxes. The rest comes from refining (converting crude to finished fuel), distribution (transport, storage, retail logistics), and taxes (excise duty + VAT). In high-tax countries, a $10/barrel crude move changes the pump price by only 3-5 cents/litre because the large fixed tax component dilutes the proportional effect. This is why pump prices in Europe look similar even when crude prices fall sharply.
What is the fuel retail markup per litre?
The retail margin — what the petrol station earns per litre — is typically the smallest component of the pump price: approximately 3-7 pence/litre in the UK and 2-5 euro cents in continental Europe. This thin margin is why many supermarket forecourts use fuel as a loss-leader to drive in-store shopping, and why independent rural stations face viability challenges. Wholesale vs retail fuel prices differ by this margin plus distribution costs.
What share of the price at the pump is taxes versus crude oil versus refining versus retail markup?
It varies enormously by country. In the United States: roughly 50–55% crude oil, 15–20% refining and distribution, and 12–15% taxes (federal + state excise; there is no federal VAT). In Western Europe: roughly 35–40% crude, 15–20% refining and distribution, and 45–55% taxes (excise + VAT combined). In countries with fuel subsidies (Iran, Libya, Venezuela), the pre-tax cost may actually exceed the pump price — the government pays the difference. The EU weekly oil bulletin publishes this breakdown for all EU member states every week, and the US EIA gasoline price breakdown shows the US split.
Terms used in this guide
Keep reading
How to compare fuel prices between countries
Why the same litre isn't the same price: currencies, units, grades and taxes.
Petrol or diesel: which costs less to run?
Price per litre is only half of it. Fuel use, taxes and distance decide.
Why some countries have very cheap fuel
Subsidies, price caps and fixed prices, and what they mean for travellers.