I'm stuck on how to set up an equation for this problem to solve for the answer.

You need to set up a proportion.

In proportion symbols

$1.35 : 1000 gal :: ? : 32,900 gal

So solve for the unknown by

multiplying the outside and multiply the inside and setting equal to each other

$1.35 x 32,000 gal = ? x 1000 gal

Of in algebraic symbols

$1.35 per 1000 Gal is ? per 32,900 gal

==>>

$1.35/1000 gal = x/32,000 gal

solve for X.Hopefully you can see you get the same equation either way.