A national view of the numbers only tells a portion of the story. In some states, the average price per gallon has moved above $4.00, and several others they are very close to that benchmark. Nearly a third of the U.S. population lives in a state where gas prices are within ten cents of the $4.00 mark or higher. 24/7 Wall St. reviewed the six states (and D.C.) with the highest gas prices.
Economists constantly debate the effects that gas prices have on consumer spending on other items, in addition to what people have to pay for their homes, cars, food and clothing. For people without cars, it is easy to measure. For people who need to commute to work, drive children to school, and shop regularly, the difference between gas at $3.30 and gas close to $4.00 could be several hundred dollars a year. That can be a substantial burden for a family, with the U.S. median household income of just over $50,000 — before taxes.
Overall, gas prices tend to be driven by oil prices, the distance that a state is from refineries, refinery activity, and, as much as anything else, state gas taxes. Oil prices have risen by about $10 in the past month, and were back near $100 a barrel earlier this month. The price has not been that high since September. Some of the increase in price can be attributed to the improving economies of the developing world, particularly China. Other reasons include ongoing tension in the Middle East.
Other than crude oil prices, refinery locations also appear to have a direct relationship to gas prices. There are 144 operable oil refineries in the United States, producing more than 17 million barrels of oil each day. Many of the states with the lowest gas prices are located in or near states with substantial refining capacity relative to population. Wyoming and Montana, which have the lowest gas prices in the country, have extremely high oil production relative to the size of their populations. In high-price states, production is often either nonexistent or very low relative to population size.
High gas taxes also tend to drive up prices at the pump. States such as Wyoming, Arizona and New Mexico — all of which have among the cheapest gas prices — have total taxes on gas of less than 20 cents per gallon. Among the 10 states with the highest gas prices, all but one has at least a 20-cent tax per gallon, and several are more than double that. California, which has the second highest cost of fuel per gallon, has a tax of more than 50 cents per gallon.
To review the states with sky-high gas prices, 24/7 Wall St. looked at current prices based on AAA data. To access the impact on the total population, we looked at 2011 Census data by state. We also reviewed the U.S. Energy Information Administration’s 2012 Refinery Capacity Report, which breaks out production by state based on barrels produced per calendar day. Finally, we looked at gas tax per state figures from the U.S. Tax Foundation.
These are the seven states with sky-high gas prices.
> Price per gallon: $3.91
> Population: 9.9 million
> Output (barrels per day): 106,000
> Tax per gallon: 39.4 cents (5th highest)
The state built by the automobile industry has only one oil refinery, and its output is negligible compared to the national total. Michigan is yet another state in which about 10% of the price of a gallon of gas goes to state excise and other taxes. Michigan’s governor, Rick Snyder, actually wants to raise the gas tax even though the price could easily reach $4.00 in his state soon. LBJ.com reports that Snyder suggested in his State of the State address that Michigan raise the wholesale gas tax by 14 cents, with the goal of raising $1.2 billion for road repair and maintenance.
> Price per gallon: $3.94
> Population: 12.9 million
> Output (barrels per day): 939,600
> Tax per gallon: 38.9 cents (tied for 7th highest)
Illinois has four refineries and a relatively high barrels per day output. However, the price-suppressing output is trumped to a large extent by its state gas and excise taxes, which are the seventh highest in the country and 10% of the total price of a gallon of regular gas. The high taxes in Illinois are exacerbated by local taxes. According to the State Journal Register: “Some municipalities pile their own sales taxes on fuel in addition — ranging from 0.25 percent in some small communities to 3.5 percent in the city of Chicago.”
5. District of Columbia
> Price per gallon: $3.95
> Population: 618,000
> Output (barrels per day): 0
> Gas tax: 23.5 cents (tied for 29th highest)
The District of Columbia also suffers from high gas taxes and a lack of refining capacity. The states immediately adjacent to it — Virginia and Maryland — do not have no refining operations either, leaving the District of Columbia without barrel production anywhere nearby. The district is one of the few parts of the U.S. that which has raised its gas tax recently. According to The New York Times: “Seventeen states have not raised their gas taxes in at least 20 years; only six states and the District of Columbia have raised their gas taxes since 2008.”
> Price per gallon: $3.97
> Population: 3.6 million
> Output (barrels per day): 0
> Tax per gallon: 48.6 cents (tied for 2nd highest)
Connecticut has two strikes against it resulting in higher gas prices. The first is that it has no refining capacity. The other is that it has an extremely high gas tax. Every gallon of gas is taxed 48.6 cents, tied with several other states for the second-highest in the country. Last April, Connecticut’s Governor Dannel Malloy signed a bill that caps the state’s tax on the wholesale price of gas. However, a number of experts told the media that the decision would not mean much if the other components of fuel prices continued to rise.
3. New York
> Price per gallon: $3.99
> Population: 19.5 million
> Output (barrels per day): 0
> Tax per gallon: 49 cents (the highest)
New York drivers are bashed by a marriage of no refineries, no oil output from facilities within the state and the highest gas tax among the 50 states and the District of Columbia. However, there is a real chance that New York may soon lose its crown as the state with the highest gas taxes to its neighbor, Pennsylvania. According to Times-Tribune.com, Pennsylvania governor Tom Corbett “struck a populist note in this week’s budget address, saying lifting the Oil Company Franchise Tax cap would force oil and gas companies to ‘pay their fair share.’”
> Price per gallon: $4.17
> Population: 38 million
> Output (barrels per day): 1.96 million
> Tax per gallon: 48.6 cents (tied-2nd highest)
Although California has the third largest daily output of barrels per day after Oklahoma and Texas, its state tax per gallon is second among all states. Almost 12% of the price the consumer pays goes to excise taxes and other fees. Helping to drive prices down, California has 16 oil refineries producing 1.8 million barrels per day. Taxes appear to trump refinery capacity, but the issue is more complex than that. Research website Econbrowser reports that there are two factors causing the sunshine state to have the second highest gas prices in the country. A different blend of gas must be used because of air quality standards. the state also has “little pipeline capacity to bring in refined product from elsewhere.”
> Price per gallon: $4.28
> Population: 1.4 million
> Output (barrels per day): 147,500
> Tax per gallon: 47.1 cents (4th highest)
Hawaii may have some refining capacity, but it is also more than 2,300 miles from the West Coast. That means the likely very high transportation costs of gas cannot be compared to any other state. As a matter of fact, the transportation costs to get gas to Hawaii are so high that often the state does not rely on U.S. supply at all. According to the Hawaii Reporter, the state primarily buys its oil from Asia, as well as the Middle East. The EIA reports that Hawaii has only two refineries. Aggravating the supply problem, the state also has one of the highest gas taxes of any in the union.