Gas prices are falling. In fact, they’ve declined to lows not seen in months. Concerns of yet another global recession have caused oil prices to drop, and with them, gas prices. In the U.S., prices of regular unleaded gasoline have fallen more than 50 cents per gallon since May, when the cost hovered near $4.00. Still, gas prices vary widely between states – from $4.24 a gallon in Hawaii to $3.13 in Missouri, according to AAA. 24/7 Wall St. set out to find the states with the lowest gas prices and the possible reasons behind them.
Fuel has dropped by nearly a cent every day for the past four weeks, the New York Times reports. In some states, prices have fallen more than the national average, and in some regions, they have even fallen below $3.00 per gallon. Several factors affect gas prices depending on the state, but the main ones are gas taxes, the presence of nearby refineries, and what the people of the state can afford.
The Tax Foundation reports that some states, including California and New York, have gas tax rates of nearly 50 cents per gallon. Other states, including South Carolina and Oklahoma, have a tax of less than 20 cents. while there are some exceptions, notably Indiana, most of the states with low gas tax rates also have low gas prices.
The presence of refineries within the state also appears to have a significant impact on gas prices. Texas, Oklahoma, and Louisiana are home to the vast majority of the nation’s fuel processing plants, and prices are notably lower in these states, possibly due to lower transportation costs. The exception to this rule is California, which has the second most refineries in the country, but also has one of the highest average gas prices of $3.82. This is likely due in part to its gas tax rate, which is the highest in the country.
The final factor affecting state and regional gas prices is how much people can afford to pay. There is a high correlation between states with low median household incomes and states with low gas prices. The prices residents can afford to pay, in turn, affects the state’s cost of living.
In order to identify the ten states with the lowest gas prices, 24/7 Wall St. used AAA’s Daily Fuel Gauge Report, which presents the most recent statewide average cost of regular gasoline. To find how many refineries each state has, we looked at the Energy Information Administration list of the major refineries in the U.S. We obtained median income data from the U.S. Census Bureau and state gas taxes The Tax Foundation. Finally, 24/7 Wall St. used the Missouri Department of Economic Development calculations to identify the cost of living in each state.
These are the ten states with the cheapest gas in the country.