Gas price experts at Gas Buddy recently made their annual forecast of gas prices nationwide over the Fourth of July weekend. Gas prices will be at their highest level since 2014. The average price for a gallon regular in the U.S. is predicted to be $3.11. That is $0.93, or 43%, higher than last year. Among these skyrocketing prices, one state’s gas prices will be over $4 a gallon.
Patrick De Haan, head of petroleum analysis at GasBuddy commented, “With the economic recovery from Covid continuing, gasoline demand has been very strong. Amidst lower oil production as oil companies struggle to raise output, gas prices have been higher this summer than in the past few years.” He expects the demand for gas among travelers to push the price up even more.
The best predictor of gasoline prices is oil prices. Oil prices almost always outweigh other factors such as refinery costs, transportation costs, and state gas taxes. Oil prices have risen an extraordinary 108% since the U.S. presidential election. The price was $36 a barrel at the end of November. At $73 a barrel, it now trades near the highest price in a year.
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 four states with the lowest per-gallon gas prices are Mississippi ($2.73), Texas ($2.74), Louisiana ($2.69), and South Carolina ($2.74). The lower transportation costs from refineries to nearby areas shaves down the average price of gas, compared with much of the rest of the nation.
Another primary factor in gasoline prices is taxes. According to the American Petroleum Institute survey of state gas taxes as of Jan. 1, the U.S. average gasoline tax 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).
The high gas tax in California clearly has an effect on its price. It is the only state with an average gas price for a gallon of regular above $4, at $4.25.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.