Cars are costly … from monthly payments to repairs to auto insurance. And then there’s gas … which is pretty costly in and of itself. But you don’t need us to tell you that: you get an unpleasant reminder every time you pull in to the pump. And some of us are feeling the bite a bit more than others.
First, why are prices so high in general? Well, there are a few factors: the cost of crude oil, the cost of refining, the cost of getting the gasoline to the pump itself, overall demand, and taxes. Every state has its own gas tax, for example.
So which states have it the worst…and why? Interestingly, the ones that take it on the chin the hardest are all on our West Coast.
Cost Per Gallon: $4.56
It seems weird that a state known primarily for its oil would have expensive gas prices, but the reason is really pretty simple. Sure, Alaska has a lot of black gold sitting under its crust…but it doesn’t have the refinery capacity to meet demand. So to get gas, Alaska has to pump out the crude oil, ship it out to refineries in California or even Texas, and then ship the gasoline back. That costs.
Worse, there’s no easy way for distributors to get any sort of product to our northern-most state. Either they can drive it through Canada, which means they’ll have to comply with Canadian shipping rules…or they’ll have to bring it in by boat. Neither are good for keeping costs low. The only bright spot is that its gasoline taxes are the lowest in the nation, since for obvious reasons they’ve got enough problems.
And that puts it in the same boat with our other non-contiguous state…
Cost Per Gallon: $4.55
It’s a problem the Aloha State knows all too well. Everything, and we mean everything, that is sold in Hawaiian stores has to be shipped over by boat. That’s why pork is so popular over there: it’s a lot cheaper to run a pig farm in Hawaii than it is to ship over steaks in refrigerated ships. Unfortunately for Hawaiians, there’s no local oil to farm, which means they get their gas by boat…and pay for the “privilege.”
Cost Per Gallon: $4.21
The Golden State has an entirely different problem. It’s got plenty of refinery capacity, but it’s not a major oil producing state. So the oil needs to be either trucked in from North Dakota, Canada, or Texas, which is tough even in the modern day, or brought in by tanker from Alaska. That adds some pain to the pump, but you’d think having refineries nearby would help a bit.
Well, it would, but one small problem, though: demand. There are more than 30 million vehicles on the road in California, more than any other state, and twice that even of Florida, which comes in second for the most cars. Also, California is not a tiny state, meaning that fuel still needs to be trucked from refineries to the gas stations, adding to the price.
Adding to California’s gas woes is the gas taxes, some of the highest in the nation.
Cost Per Gallon: $4.07
Washington benefits from getting oil from the Montana and Utah pipeline, but that doesn’t mean it necessarily has the capacity to keep up with the demand for gas from cities like Seattle, Tacoma, and Spokane, since there are only six refineries in the state. California, for contrast, has 20. As a result, they get dinged by higher prices…although at least they’re not California.
Cost Per Gallon: $4.03
Oregon sits in a “sweet spot”; it’s between two states with lots of refinery capacity and near one that ships out crude oil. Unfortunately, it’s still dinged by shipping prices and basic demand, and it’s not like the oil coming over the Rockies is magically cheaper. So they’re still paying over $4 a gallon; they’re just the best off of a bad lot.
So who’s winning the gas price wars?
Cost Per Gallon: $3.50
Two things help Tennessee’s gas prices: moderate demand, and proximity to states like Texas and Louisiana, with plenty of crude oil and refining capacity. The low gas taxes also help to moderate prices, but it’s really that sweet spot of demand and access to various shipping routes, such as the Mississippi River, that keep its prices low.
Cost Per Gallon: $3.48
Kansas is another state that benefits by location: because it’s on the way to the West Coast, gasoline tankers are stopping off there anyway. Also helping: being close to Oklahoma, which has lots of refineries and crude oil, and thus makes shipping costs a lot lower than other states.
Cost Per Gallon: $3.47
Another beneficiary of being close to Texas and Louisiana, Arkansas has an added advantage: an extremely low gas tax. In addition, Arkansas has low enough demand that most of its gas can come from its own two refineries, meaning the cost savings are passed on to the consumer.
#2) South Carolina
Cost Per Gallon: $3.44
South Carolina benefits from something very simple: there’s plenty of supply nearby, but it only has moderate demand. Economics work in South Carolina’s favor, especially since it’s on the way to states with higher demand, making it cheaper to ship gas to South Carolina since, heck, they’re going through anyway. A low gas tax also helps, putting South Carolina in the number two slot.
Cost Per Gallon: $3.42
No two ways about it, Oklahoma is blessed with cheap gas for multiple reasons. One, it’s got crude oil of its own, as well as its own refinery capacity. Two, it shares a border with Texas, which is no slouch in the crude oil and refinery front itself. Three, it has some of the lowest gas taxes in the nation, which keeps prices nice and low. And four, it’s got only moderate demand, so with the enormous supply, it has more than enough to meet demand.
How’d your state do? We’ve got a full chart, right here.