The price of oil surged to over $70 a barrel after a military attack on a Saudi oil field. Gasoline prices, already rising sharply, have reached multiyear highs. Ten states have gas prices that have cracked the barrier of $3 for an average gallon of regular.
In fact, as the price of oil has risen, predictions that gasoline will top $3 nationwide for the average gallon of regular have grown. Recently, the carefully followed analysts at GasBuddy forecast a 70% chance per-gallon gas prices will reach $3 by Memorial Day. The company added, “The last time the national average reached the $3/gal threshold was over 2,300 days ago, on October 10, 2014, but did get close in 2018, when the national average reached $2.97 per gallon.”
Additionally, oil prices have risen an extraordinary 72% plus since the U.S. presidential election. The price was $36 a barrel at the end of November, and currently at $62 trades near the highest price in a year. Gasoline prices also have surged. Today, the average price for a gallon of regular in the United States was $2.88, up from $2.62 a month ago and $2.17 a year ago.
The best predictor of gasoline prices is oil prices. They almost always outweigh refinery costs, transportation costs and state gas taxes.
Gas prices by state vary from the national average for several reasons. The first is proximity to refineries. States near the huge refineries along the Gulf of Mexico tend to have the lowest prices in the country. Notably, the five states with the lowest per-gallon gas prices are Mississippi ($2.60), Texas ($2.62), Louisiana ($2.62), South Carolina ($2.62) and Oklahoma at $2.65. The transportation costs from refineries to nearby areas shaves the average price of gas down, compared with much of the rest of the nation.
Another primary factor in prices is gasoline taxes. According to the American Petroleum Institute survey of state gas taxes as of January 1, the U.S. average is $0.5523 a gallon. States with low gas taxes include Missouri ($0.3582), Mississippi ($0.3719) and New Mexico ($0.3738). The states with the highest gas taxes are California ($0.8145) and Pennsylvania ($0.7710).
Ten states currently have average prices for a gallon of regular at or over $3. California’s $3.88 price clearly is affected by its gas tax. In Hawaii, the price of $3.57 is affected by a relatively high gas tax at $0.6524 per gallon. However, the cost of transportation to islands that are 2,500 miles from the west coast is also a major contributor to Hawaii’s price. The price for a gallon of regular in Washington is $3.32. Its gas tax is a high $0.678 per gallon. Nevada is at $3.27. Oregon’s price is $3.14, as it is in Utah. Arizona’s is at $3.11. Alaska is at $3.10. Pennsylvania is at $3.03. The price in Illinois is $3.08.
If the GasBuddy analysis is correct, people who might drive for Memorial Day, despite the pandemic, will pay more at the pump than they did last year.