Cities with the Most Expensive Gas

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As we head into Labor Day weekend, gasoline prices nationally are down about 21 cents a gallon from last year to around $3.57 a gallon, according to GasBuddy.com. Marking the traditional end of the summer driving season, next week’s holiday presents a good opportunity to look at gas prices around the country.

An unanticipated closure of an East Coast refinery sent prices soaring to a year-to-date high by mid-February. Gasoline prices have fluctuated since then, but have been trending slowly downward. Prices in some cities remain exceptionally high, however, at least 25 cents more than the national price. Gas in Honolulu as of earlier this week averaged $4.23 per gallon. These are the cities with the most expensive gas.

Click here to see the 10 cities

Americans are driving less and as newer, more fuel-efficient vehicles replace older ones in the country’s fleet, demand is also decreasing. The main reason that crude oil and gas prices remain high is uncertainty about the future availability of crude. Events in the Middle East, the source of more than a third of the world’s supply of crude, figure heavily in market prices for crude and eventually gasoline. The threat of military action in Syria has driven up crude and gas prices since late Monday, with West Texas Intermediate (WTI) crude for October delivery trading near $109 a barrel on Tuesday.

In the nine cities with the highest gas prices, four of the cities are on the East Coast, two are in California, and there is one each in Alaska, Hawaii, and Idaho. The concentration of cities on the East Coast is due to a variety of reasons, the most important of which is that Northeast refineries obtain most of their crude oil from non-U.S. sources, raising the cost of refined products and ultimately the price for consumers. Gregg Laskoski, senior petroleum analyst at GasBuddy.com points out, “for a long time the Northeast has had to rely on Brent crude oil, which has to come across the ocean from Europe.”

Many of these cities are also in states with much higher taxes driving up rates. Connecticut, California, Hawaii, and New York – where all but two of these cities are located — all have among the highest state taxes in the country. “There are regions of the country where it is almost a given that gas prices are going to be higher simply because taxes are higher,” explained Laskoski.

These are also among the most expensive cities in the country to to live in. As of the beginning of this year, New York City, Honolulu, and San Francisco, all of which have among the highest gas prices, had the highest overall cost of living. This is likely not a coincidence, explained Laskoski. “where you have affluent markets, you’re going to have retailers that are going to push their prices to a level that they think the market will bear.”

Using GasBuddy.com’s list of cities with high gas prices, 24/7 Wall St. reviewed the nine cities with the highest gas prices as of August 25. Those numbers are regularly updated, and may have changed since then. 24/7 Wall St. also reviewed city cost-of-living data from the Council for Community and Economic Research as of the first quarter of 2013. We also considered state gas prices, also as of August 25, from AAA’s daily fuel gauge report. Current and historical gas prices come from data at GasBuddy.com, and gas tax data comes from the quarterly review of state gas taxes from the American Petroleum Institute.