The single biggest factor in the price of gasoline is the cost of the crude oil from which it is made. In recent years, the world's appetite for gasoline and diesel fuel grew so quickly that suppliers of these fuels had a difficult time keeping up with demand. This demand growth is a key reason why prices of both crude oil and gasoline reached record levels in mid-2008. By the fall of 2008, crude oil prices began to fall due to the weakening economy and collapse of global petroleum demand. These factors helped gasoline prices to drop below $2 per gallon of Regular gasoline in late 2008 and early 2009. The gradual improvement in the U.S. and world economies in 2010 and the political events in the Middle East and North Africa in early 2011, the source of about one third of world oil production, contributed to the increases in crude oil and gasoline prices in 2010 and 2011.

There are three main grades of gasoline, based on octane levels: regular, midgrade, and premium. The octane level of a fuel refers to its resistance to combustion; a fuel with a higher octane level will be less prone to pre-ignition and detonation, which is also known as engine knocking. Premium grade is the most expensive; the price difference between grades is typically about 10¢ per gallon.

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The United States consumed 19.1 million barrels per day (MMbd) of petroleum products during 2010, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.5 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.2 MMbd in 2010.

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