Factors That Affect Gas Prices

Factors That Affect Gas Prices

When looking at a heat map of gas prices across the US, a definite trend pops out. Whole swaths of the country are noticeably far more expensive than others, with those areas clearly defined by state. I've been aware of this disparity for the entirety of my driving life, but I've rarely taken the time to question why. I figured that in some areas it must have something to do with the availability of refineries or different regulations, but on the whole I was missing the most pressing reasons. Our partners at Sewell Lexus Of Fort Worth Collision Center in Fort Worth, TX shared my interest in the topic and thankfully were able to shed a little more light on the subject.

The most impactful factor is simply a matter of taxes. The higher the taxes by state, the more it impacts at the pump. For example, the least expensive gas in the US belongs to South Carolina, whose taxes per gallon are the third lowest in the country at 21 cents. On the other hand, California has the second highest gas rate and the the second highest tax rate to boot, coming in at over 54 cents a gallon. This doesn't stand up in every case, though. Alaska has the one of the lowest tax rates in the country but overall is one of the most expensive places at the pump.

The availability of refineries does play a part in gas prices, especially in more remote areas. To transport gas into a state that doesn't have high refinement capabilities is expensive. This is even more so in cases where you have to cross international borders or transport it over a body of water via tanker, as in the cases of Alaska and Hawaii. It's really no surprise to find that in cases where refinement is low and taxes are high, you'll end up with some of the highest gas prices in the country. This is why Hawaii tops the list.

The third and least impactful factor relates to the state environmental standards in relation to the refinement process. The more stringent the regulations on refinement, the more expensive the gas is to produce. This is one of the two reasons California is in the second most expensive spot.

When traveling cross-country, you may get the opportunity to experience this first hand. Hopefully your travels may take you through the South, where prices are the statistically the lowest. Wherever your travels take you, be safe and happy driving!

Written By: Todd Hendrickson
Source: Gas Buddy