How are gas prices set? : Planet Money High gas prices have fueled speculation and investigations — is anyone raising prices and keeping prices high for profit? To find out, we break down the price of gas, piece by piece, to show you how we get to the price we see at the pump and how much everyone profits at each step of the way. | Subscribe to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.

Breaking down the price of gasoline

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SYLVIE DOUGLIS, BYLINE: This is PLANET MONEY from NPR.

(SOUNDBITE OF COIN SPINNING)

SARAH GONZALEZ, HOST:

Well, it has been a great time to be an oil and gas company. Like, they have seriously made more money than they have ever made. Shell broke its profits record - and then broke it again. They made $11.5 billion in just three months. ExxonMobil - $17.9 billion - also a record. Money is just, like, pouring down on these people. We are talking windfall profits here.

NICK FOUNTAIN, HOST:

And the optics are not great - right? - because gas prices reached record highs. For months, filling up at the pump has been brutal.

GONZALEZ: And gas prices are a really important number to pay attention to. Gas prices are one of the main drivers of inflation. Like, if it costs more to transport food because gas prices are high, then the price of food goes up, too. Everything starts to cost more for consumers because our economy runs on gas.

FOUNTAIN: States, Congress, the president - they are all looking into who is to blame for high gas prices, whether anybody at any point in the process has the power to keep them high on purpose.

(SOUNDBITE OF MUSIC)

GONZALEZ: Like, is it oil companies? Do they have the power? Is it refineries? Is it gas station owners?

FOUNTAIN: Yeah. Who are we going to shake our fists at?

(SOUNDBITE OF MUSIC)

GONZALEZ: Hello, and welcome to PLANET MONEY. I'm Sarah Gonzalez.

FOUNTAIN: And I'm Nick Fountain. Today on the show, what is to blame? To find out, we follow a barrel of crude oil sold in the global market to the refinery, where it gets turned into gasoline and then sent to your gas station.

GONZALEZ: We'll tell you how much everyone profits at each step of the process and show you, cent by cent, how we get to the price we see at the pump.

FOUNTAIN: There will be math.

GONZALEZ: Simple math - it's addition.

FOUNTAIN: And one division.

GONZALEZ: One division, that's right.

(SOUNDBITE OF MUSIC)

GONZALEZ: OK. We're back.

FOUNTAIN: It's PLANET MONEY.

GONZALEZ: We are breaking down the price of gasoline that you see at the gas station. Right now, the federal gas price average is around $4 a gallon, so that's what we're going to work off of.

FOUNTAIN: And before you can even put that gas in your tank, your gas goes on a journey. And today, we're going to go on that journey with it. Yep, it's a gas math journey.

GONZALEZ: There will be some drilling.

FOUNTAIN: There's probably going to be a little shipping.

GONZALEZ: Little bit of refining.

FOUNTAIN: Maybe even some filling of the tank.

GONZALEZ: And our question for each of the steps on our gas math journey - does anyone have the power to keep prices high on purpose?

FOUNTAIN: Yeah, we want to do a little forensic accounting. So we called up an oil and gas pricing economist.

SEVERIN BORENSTEIN: OK.

GONZALEZ: Great.

BORENSTEIN: So we are recording.

FOUNTAIN: This is Severin Borenstein.

BORENSTEIN: The phone is just lying on the desk.

GONZALEZ: Can you hold it up to one ear, or...

BORENSTEIN: Oh, Sarah, you want me to hold that to my other ear?

GONZALEZ: I'm so sorry.

BORENSTEIN: OK.

FOUNTAIN: Severin has been studying the oil market since the 1980s. He's at the Energy Institute at UC Berkeley.

GONZALEZ: And Severin says that one thing in particular affects the price we see at the pump more than anything else, and it's the raw ingredient that makes up our gasoline - crude oil. Whatever crude oil sells for, that has the biggest impact on gas prices, he says. And crude oil, by the way, is sold by the barrel. Before the pandemic, a barrel was going for about 60 bucks. Right now, it's going for about 100 bucks, which is high.

BORENSTEIN: If a barrel of crude oil is $100, $2.40 of the price of the gasoline is paying for the crude oil.

GONZALEZ: OK.

FOUNTAIN: Yeah, little news you can use that we learned reporting this out - there are 42 gallons in a barrel of crude oil. So whatever the price of a barrel of crude oil is, divide that by 42 to get the cost of a gallon of crude.

GONZALEZ: So 100-ish dollars a barrel divided by 42 gallons in a barrel equals about $2.40. So a fun, simple way to think about this is, whatever price you see at your gas station right now, about $2.40 of that is just the cost of the raw crude oil.

FOUNTAIN: It's a biggie. And since crude makes up the largest proportion of what we're paying at the pump - that $4 a gallon - we are going to spend the largest proportion of our show discussing it.

BORENSTEIN: It's important to always talk about the crude oil market and recognize it is a world market.

GONZALEZ: Yeah, crude oil is sold in the global market. And if you think of this global market as this, like, you know, clear-cut website with a list of sellers and buyers and prices or something like that - yeah, it is not that. The global oil market is just a bunch of people with phones making phone calls.

FOUNTAIN: And usually, the buyer is a refinery - someone who wants to turn crude oil into diesel, jet fuel and, of course, gasoline.

GONZALEZ: So I'm some refinery. I want oil. What do I do?

BORENSTEIN: You go to a broker, typically - and sometimes you have your own - and you say, I need to line up this much oil for delivery to this refinery point.

GONZALEZ: Say Nick and I have a refinery in Europe - Nick and Sarah's refinery.

FOUNTAIN: Sarah and Nick's refinery - we all know who the boss is here.

GONZALEZ: It's not a lie. OK, so we want some crude oil delivered to us. I get on the phone with my broker, and I say, OK, I want a certain type of crude oil.

BORENSTEIN: I want it to have a certain gravity - that's the weight.

GONZALEZ: There's heavy crude, there's light crude.

BORENSTEIN: And a certain sulfur content - that's the sweet sour.

GONZALEZ: I want the sweet stuff. I heard that's the stuff we like, right?

BORENSTEIN: That's right.

GONZALEZ: OK.

BORENSTEIN: Well, yeah, mostly - not always, but yeah. And then the broker goes and looks for companies that are selling.

FOUNTAIN: Our broker starts calling up basically every oil company, every seller in the world - like, all right, Sarah and Nick's refinery is willing to pay this much per barrel.

GONZALEZ: An oil seller in - I don't know - the Middle East somewhere is like, yeah, I like that price. And that's it. The deal is made.

FOUNTAIN: But one thing you should know about oil buyers and sellers and brokers is they are kind of a gossipy bunch.

GONZALEZ: Yeah, a little bit. Everyone involved in our deal - people who are not even involved in our deal - they all start, like, whispering about the deal that Nick and I just made.

FOUNTAIN: There are these, like, professional gossips whose job it is to call around and pull people.

GONZALEZ: Like, hey, hi, nice to talk to you again. So how much did you just pay for that barrel of oil? And then, you over there, how much did you sell that barrel for? This is happening all day long.

BORENSTEIN: Oh, this is happening constantly.

GONZALEZ: Every hour.

BORENSTEIN: Yeah. And there have been issues of false reporting, although they claim they're very good at checking.

GONZALEZ: These professional gossips, who are actually called information service companies - and they're very important to the process - they turn around and they sell that pricing information to brokers - like, OK, there are a bunch of sales going on in Europe right now for $92 a barrel. In the Gulf Coast, it's going for $94 a barrel.

BORENSTEIN: So everybody knows what the going price of crude oil is. And that price doesn't vary much around the world.

GONZALEZ: I have kind of a dumb question.

BORENSTEIN: OK.

GONZALEZ: How could that possibly be true? Like, how do poorer countries compete with richer countries for these barrels of crude oil?

BORENSTEIN: They pay the world price just as they do for grain and all the other commodities in the world. And they don't get as much of it as they would like. But all of those commodities sell at, worldwide, pretty much the same price.

GONZALEZ: So like, if the United States pays $100 for a barrel of oil, Colombia also pays $100 for a barrel of oil?

BORENSTEIN: Yeah. Yeah.

GONZALEZ: And Egypt pays $100...

BORENSTEIN: Yeah.

GONZALEZ: ...For a barrel of oil?

BORENSTEIN: Yep.

GONZALEZ: So we all just pay the same amount.

BORENSTEIN: Because if they didn't, the sellers would go to the place that will pay more.

GONZALEZ: And check this out. If any one place ever does offer to pay more for oil than another place, that variation is temporary. It will not last long. The prices will be forced back together anyway because crude oil gets shipped around the world by these tankers, these very large crude carriers. That's actually their official name - VLCCs - very large crude carriers.

FOUNTAIN: There are also ultra large crude carriers. I like to call them ULCCs (ph).

GONZALEZ: (Laughter) And OK, when the price of crude does start to vary by a little bit - like by a dollar or $2 - things get messy.

BORENSTEIN: There are tankers that will be taking oil, say, from the Middle East to Europe. And if the price in Europe drops a little bit relative to, say, the price in the Gulf Coast, those tankers will, in the middle of shipping, turn the tanker and head to the Gulf Coast instead.

GONZALEZ: What?

BORENSTEIN: If the price they can get for that oil is a little bit higher in the Gulf Coast than in Europe, they'll say, oh, we're not going to deliver it to Europe. We'll deliver it to the Gulf Coast and make a couple more dollars a barrel.

GONZALEZ: This is not all, like, preplanned ahead of time?

BORENSTEIN: No.

GONZALEZ: On a day-to-day basis, they could be like, oh, no, turn the ship.

BORENSTEIN: That's right.

FOUNTAIN: It is just so cheap to move oil by very large or ultra large crude carrier that yes, the broker who connected us to our oil seller can just, mid-deal, tell the tanker to turn around - middle of the ocean - go to the Gulf Coast.

GONZALEZ: And they just don't bring me my oil?

BORENSTEIN: Yep.

GONZALEZ: There's no, like - loyalty is not the right word here, but...

BORENSTEIN: Well, no, there is. I'm sure there is. But I think brokers can - well, brokers can make everyone better off.

FOUNTAIN: Our broker can find us cheaper oil. And the oil company already got a better deal. That's why the tanker turned around. So this can all be a win-win.

GONZALEZ: And so does this little system of, like, oh, ah, someone else wants it for more, I'm going to turn the tank around and give it to them - does this kind of keep the price of crude oil the same everywhere in the world?

BORENSTEIN: Exactly. So that ability to move oil very easily from location to location and to switch delivery points is what the market refers to as arbitraging. And so that arbitrage is what keeps prices very close together.

GONZALEZ: The tankers turning around in the middle of the deal or even just threatening to turn around - that is how prices are forced back together. And there's a fancy economic idea for when prices are forced back together. It is called the law of one price.

FOUNTAIN: The law of one price, which says the same good should sell for the same price all over the world if a couple things are true - mainly transaction costs and transportation costs are zero.

SARAH GONZALES, HOST:

Which doesn't happen very often with physical goods because, like, what costs $0 to transport, right? But oil - oil does get pretty close to being a perfect example of the law of one price because it is so, so cheap to transport oil.

FOUNTAIN: All right. So we went looking to see if anyone could manipulate the price of oil. And what we found was - let's do it here - buyers...

GONZALES: And sellers...

FOUNTAIN: ...And tankers and - those tankers that are turning around...

GONZALES: ...And brokers and a law that isn't an actual, like, law law. Basically, we found the market.

FOUNTAIN: Yup. It's the market that's determining the price.

GONZALES: You knew it. You felt it. You know, you hear people saying, like, are gas companies price gouging? Are they, you know, doing...

FOUNTAIN: Yeah.

GONZALES: ...X, Y and Z to try to, like, get more profit in this moment? You're just kind of like, well, does any one oil company really have the power to sway oil prices?

BORENSTEIN: Yeah. No U.S. oil company does. The biggest producers, like Exxon, are still only producing a couple of million barrels a day relative to a world market of about 100 million barrels a day.

GONZALES: And I mean, oil companies could keep prices high by withholding oil from the world market. That would drive up the cost of a barrel. But Severin says it wouldn't be worth it for U.S. oil companies to do that because they frankly don't make enough oil to withhold some.

FOUNTAIN: But some companies, some countries, they do make so much oil that they can withhold a bunch of it. And it doesn't hurt them because they're still selling a bunch - like Saudi Aramco or the group that it's a part of, OPEC.

GONZALES: The Organization of the Petroleum Exporting Countries. It's basically what it sounds like, a group of oil-producing countries. OPEC produces 28 million barrels a day. That is almost 30% of the world's supply. So they do have the power to manipulate oil prices and therefore gas prices. And they use it. Like, they withhold oil on purpose to limit supply.

FOUNTAIN: But OPEC does not fully account for that wild spike in oil prices that we've seen recently. That story is a little more complicated. And for help telling it, we called up another economist, Ryan Kellogg. He used to work at BP. He was a well test engineer. They actually offered him one of those jobs as an oil broker.

RYAN KELLOGG: I turned that down. I decided I did not want to do that, and I became...

GONZALES: OK.

KELLOGG: ...An academic instead.

GONZALES: Any regrets about that decision?

KELLOGG: No, I'm pretty happy with how things came out.

GONZALES: Ryan is now at the University of Chicago, and he has focused a lot on the incentives that actually convince oil companies to increase supply, to drill for more oil.

FOUNTAIN: And there is one number that he pays a lot of attention to - rig counts.

KELLOGG: Exactly. So rig counts are a measure of how many drilling rigs in the U.S. are actively drilling an oil or gas well at any given point in time.

GONZALES: The rig is basically the drill that pokes holes in the ground looking for new oil. So rigs equal new oil supply.

KELLOGG: And after the pandemic hit and oil prices collapsed, rig counts collapsed along with it, basically, to the lowest levels in recorded history.

FOUNTAIN: It was a rough time to be a rig worker. Everything came to a standstill. No one wanted crude oil 'cause no one wanted gas. No one was driving. And the price, you might remember, of crude oil plummeted down to $0 - actually, negative dollars for a little bit. We did an episode about it at the time.

GONZALES: Oil companies were, like, at zero or close to $0, it is no longer worth it to drill for oil. And so the number of rigs in operation, the rig count, dropped.

KELLOGG: So we're talking about going from a bit over right around a thousand rigs down to about 250...

GONZALES: Oh, crap. That's...

KELLOGG: ...By the summer of 2020.

GONZALES: That's a big difference.

KELLOGG: Yeah. The industry, more or less, stopped drilling.

FOUNTAIN: Hundreds of rigs were taken out of commission.

KELLOGG: Yeah, the industry term, they call it stacking a rig.

KELLOGG: Stacking.

KELLOGG: Stacking it. Yeah. They're not literally stacked on top of each other. At least, I don't think they are. But you can imagine just, you know, a big open field in the middle of West Texas where there's just a bunch of rigs sitting there.

GONZALES: So we were not tapping new sources of oil. We had low oil supply. And then, two things happened that changed everything.

FOUNTAIN: And you will remember both of these things. Basically, most people in the world just sort of collectively decided that the pandemic was over, started driving again. And shortly after, Russia invaded Ukraine, and much of the world stopped taking Russia's oil. All of a sudden, we didn't have enough oil supply. And this made the price of crude go way up. At one point, it hit $130 a barrel, more than double what it had been before the pandemic.

GONZALES: And there's this saying, that the solution to high gas prices is high gas prices because it makes it worth it for people to drill for more oil and produce more oil, which happened. Once oil prices hit a certain point, oil companies were like, OK, it's worth it to drill again.

FOUNTAIN: Unstack the rigs.

KELLOGG: So now there's this really strong incentive to get rigs out of stack and find crews again. But that's not the sort of thing you can just snap your fingers and make happen. You lay off a bunch of rig crews in 2020. Now it's 2022. It's not like those people are just sitting around, waiting for you to call them. If you're a rig operator, they've gone and found other jobs. You have to do some maintenance on the rigs before you can pull them out of stack. You can't just drag it out of stack and start drilling a well right away. All of that takes time.

FOUNTAIN: And also, there is a little lag between drilling a well and having that well pumping at full capacity.

GONZALES: Yeah. Ryan says it takes one to two months.

FOUNTAIN: So that is why supply in the U.S. has taken some time to ramp back up. But it has ramped up. Right now, the rig count is 765. There are 765 rigs out there drilling wells. But remember, before the pandemic, there were a thousand.

GONZALEZ: And some lawmakers are like, what's the holdup, guys? Why didn't you ramp back up sooner? You could increase supply. That would lower oil, and therefore gas, prices.

FOUNTAIN: Yeah. But Ryan, who studies this stuff, says he has not seen any evidence that oil companies held back on drilling with the explicit goal of keeping gas prices high.

GONZALEZ: And listen, gas prices have been falling, from the high of about $5 a gallon in June to about $4 a gallon right now. And maybe it's a little bit rig counts, but also, people have stopped wanting to drive because prices were high. Demand went down.

FOUNTAIN: Also, the U.S. has been pulling from its Strategic Petroleum Reserve, taking a million barrels out a day from its secret underground salt domes.

GONZALEZ: Now, the White House says that releasing oil from the reserves, along with other international partners that are also doing this, has lowered gas prices by about 40 cents per gallon. Ryan says we don't really know, though.

KELLOGG: It's hard to know exactly how much it's lowered prices. It's almost certainly not a huge amount, but it's not zero either.

(SOUNDBITE OF MUSIC)

FOUNTAIN: All right - first stop iin our gas price math journey complete. Crude oil done - $2.40 of our $4-a-gallon national average.

GONZALEZ: We still got a buck 60 to go. That's after the break.

FOUNTAIN: Hey, Nick here. Before we get back to the show, I want to let you know that in our next episode for PLANET MONEY+ subscribers, we'll give you a look behind the scenes of the show. We're talking about what it takes to make an episode like the one you're hearing right now and what we, as hosts and reporters, try to bring to the process. You can hear that with me and Amanda Aronczyk in our episode out next week. Subscribe to get it at the link in our episode notes.

(SOUNDBITE OF MUSIC)

FOUNTAIN: All right. Let's do this.

GONZALEZ: It's PLANET MONEY.

FOUNTAIN: We got some crude. That alone makes up $2.40 of what we pay at the gas station for a gallon of gas.

GONZALEZ: But you cannot put crude oil into your car, right?

BORENSTEIN: Well, yeah.

GONZALEZ: Right. OK.

BORENSTEIN: That - it makes up that component of the price of gasoline.

GONZALEZ: OK. Severin Borenstein, who told us about tankers turning around in the middle of the ocean - he is back to walk us through the next step in our gas price math journey - refining the crude. We got to refine this baby, turn it into gasoline.

FOUNTAIN: Yeah. Severin says refining - that's going to add about 65 cents to our gallon of gasoline right now.

BORENSTEIN: And that's all the costs of the refinery equipment and labor and the profit they make and so forth.

FOUNTAIN: Now, if you ever wondered what refining is, it is basically boiling oil and then collecting the vapor, some of which is gasoline, and putting it through more pipes than the human mind could possibly comprehend.

GONZALEZ: And if that sounds like something you maybe wouldn't want to get into, historically, Severin says, you're right. Back in the 1980s, he says, it was sort of common knowledge that no one made money refining, that you'd only lose money. But recently, refineries have been making out like bandits.

BORENSTEIN: Oh, yeah. The refineries were making boatloads of money a few months ago - more than double the normal level.

FOUNTAIN: More than doubled their normal profit margins - and the reason why is similar to recounts. During the pandemic, a bunch of old clunker refineries that were going to shut down in, like, two or four years - they just decided to retire early, like, permanently shut down. So there was an unusually large exit of refining capacity.

GONZALEZ: And then when demand for refined oil came, like, roaring back all at once, we didn't have enough refining capacity. But unlike with oil rigs, you don't just build more refineries right now based on what the price of oil is right now because it costs a lot of money to build a new refinery, and they last a very long time.

BORENSTEIN: Yeah. Those refineries last decades.

FOUNTAIN: Amazingly, no one in the U.S. has built a refinery in more than 50 years. And there are all kinds of signals that maybe we won't need refineries decades from now because, you know, maybe we'll all have electric cars and ride e-bikes and have solar panels on our roofs - you know, green energy.

BORENSTEIN: At the same time we are saying that we'd like more refinery capacity today, we're saying, we actually want to use a lot less of this product 10 or 20 years from now. And the refineries are rightly saying, you can't really expect us to make big investments in building new refineries if you keep telling us our product's going to go away in 10 or 20 years. So...

GONZALEZ: Is it going to go away in 10 or 20 years?

BORENSTEIN: Well, I think we're going to make a lot of progress. And I think that actually 10 years from now, the oil market is going to look completely different...

GONZALEZ: Ten? No.

BORENSTEIN: ...Because - 10 - if we take even 20% or 30% out of world demand, the price of crude oil will collapse. It will go down to $20 or $30 a barrel.

GONZALEZ: Well, we're going to check back in with you in 10 years.

BORENSTEIN: Please do.

GONZALEZ: But OK, back to the math. And it's all pretty simple from here. That 65 cents for refining - we're going to add that to our $2.40 for the crude oil. We are $3.05 into our gas price math journey. We got a buck to go.

BORENSTEIN: And then you start adding taxes. And there's - 18.4 cents is the federal gas tax, and that has been the federal gas tax since 1993. It hasn't changed.

FOUNTAIN: The federal gas tax goes to pay for highway maintenance, things like that. So add 18.4 cents. Now we are at $3.23 and four-tenths of a cent. But no, no, no; we are not done with taxes yet. We got the state ones.

BORENSTEIN: State taxes vary enormously but average, in the United States, about 30 cents a gallon.

GONZALEZ: So we're at, like, $3.50-ish.

BORENSTEIN: Right.

GONZALEZ: Three dollars and fifty-three cents and four-tenths of a cent to be exact.

BORENSTEIN: But we still haven't delivered the gasoline to the gas stations, and we still haven't paid to operate the gas stations.

FOUNTAIN: And those numbers are harder to pin down. As we are all painfully aware, gas prices - they for sure do not follow the law of one price. They vary a ton city to city, even block to block - depends a lot on where the gas station is.

BORENSTEIN: Whether it's in the middle of a city or out in a less densely populated area 'cause land costs are different and labor costs are different - but typically, that's going to add another 20 to 50 cents a gallon.

GONZALEZ: Twenty to 50 cents.

FOUNTAIN: Let's go with 50 cents. Where are we at now?

GONZALEZ: Which brings us into the $4-ish range.

BORENSTEIN: Right.

GONZALEZ: That brings us to at most, $4.03 and four-tenths of a penny, which means we have completed our math because the...

FOUNTAIN: Oh, my God.

GONZALEZ: ...Federal gas average - $4.

FOUNTAIN: We did it, Sarah.

GONZALEZ: We did it. And there's something kind of special about this $4 a gallon, actually. It is kind of like the magic bad number for gas station owners.

LEON MARKOSIAN: Yeah. Anything above the four is not good for us.

GONZALEZ: Leon Markosian is the owner of Leon's Auto Care gas station in San Marino, Calif.

FOUNTAIN: And he told us when gas prices go above $4 a gallon, he does not like that.

MARKOSIAN: I mean, I like it in the mid-threes. I mean, mid-threes - we do well.

GONZALEZ: Oh, really?

MARKOSIAN: Yeah.

GONZALEZ: So when the gas is cheaper, more people buy your gas.

MARKOSIAN: Exactly.

GONZALEZ: More people start buying. The volume goes up. People drive more. But now the prices are higher, they have to watch their spending because it's hurting them.

FOUNTAIN: Three dollars and fifty-ish cents per gallon - that's the sweet spot for Leon. That's when his gas station does well and makes good money.

GONZALEZ: But no matter what the price is, Leon's profit, after he pays rent and pays workers - it's about 15 cents to 20 cents on the gallon. But when gas prices are high, he sells fewer gallons, so he makes less profit. And then, he says, he gets all the blame for it.

MARKOSIAN: We're basically at the end of the deal. You know, we basically move the product, and we get the blame for everything.

FOUNTAIN: So who is making a killing off these high gas prices that we're paying? Gas station owners - they're not actually the winners when gas prices get high. We didn't just take Leon's word for it. Severin says this, too.

GONZALEZ: Now, refineries - yeah; they're doing pretty, pretty good right now. But oil companies, the ones who find the oil, dig it out of the ground - they are doing the best.

BORENSTEIN: We're paying $100 a barrel for crude oil right now, not because most of the oil or hardly any of the oil costs $100 to produce and deliver. Most of the crude oil in the world can be produced for less than $20 a barrel. In the United States, that probably costs closer to $40.

FOUNTAIN: To be clear, the cost of producing oil hasn't changed. It's just that the price that it sells for has gone way up. So the difference between the two - $60 a barrel in the U.S. - that is all profit going to the oil companies.

BORENSTEIN: I mean, they are making tons of money. But they're making tons of money because they're in the right place at the right time. They're the lucky beneficiaries of a crude oil market that has too much demand for the existing supply and a refinery market that has too much demand for the existing supply.

GONZALEZ: Some big oil companies that you know of - like Shell, Chevron, Exxon - they both sell crude and refine crude. By the way, Chevron is a financial supporter of NPR. And it is these big oil companies who are the ones who were having these, like, extraordinary windfall profits, right? But Severin says it's really just out of pure luck. They're just real lucky, guys, which, like - how unsatisfying, right? So some people say, you know, we should do something with this luck. We should tax this luck.

BORENSTEIN: Right - what's called a windfall profits tax.

GONZALEZ: Britain's doing this. Britain is taxing its oil companies. BP, Shell - they have to pay a 25% tax on their profits in a windfall profits tax. The British government says they're going to take that money and give it to households to ease high energy bills.

FOUNTAIN: Yeah. I'm just going to go out and say, it does not seem like that's going to happen anytime soon in the U.S.

GONZALEZ: Yeah, probably not.

(SOUNDBITE OF DAVID FAHR PETERSEN AND GLYN MICHAEL OWEN SONG, "MARVELLOUS VIBE")

FOUNTAIN: Speaking of gas prices, our dear newsletter writer, Greg Rosalsky, got his truck stolen, and since then, he has been on a tear of newsletter writing about both the economics of car theft and car buying. You can find that newsletter at npr.org/planetmoneynewsletter.

GONZALEZ: Today's show was produced by Dave Blanchard, with help from Gilly Moon. It was edited by Jess Jiang. I'm Sarah Gonzalez.

FOUNTAIN: I'm Nick Fountain. This is NPR. Thanks for listening.

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