I've run through this calculation here before, but it's always interesting to rehash: Both LOX and kerosene are about the price of milk. If we assume that a ga

I've run through this calculation here before, but it's always interesting to rehash: Both LOX and kerosene are about the price of milk. If we assume that a gallon of either weighs about 7 lbs, then it takes, at 1% mass fraction, 99 lbs, or about 14 gallons, of fuel and oxidizer to put a pound of payload into orbit. At a 2% mass fraction, it's only 7 gallons. Call it $3.50 per gallon, so the fuel cost for a pound of payload is only about $25-$50. It's truly negligible compared to the cost of the rocket, whose costs are tied mainly literally to paperwork, due to the very tight margins on the factors of safety. The rest of the equilibrium cost is going to be amortizing that rocket over as many launches as is responsible.