Experts have already begun to mention the chance that the average price for a gallon of regular gasoline will drop below $2 in some parts of America. There are several states where this is highly likely. As a matter of fact, the prices in these states could drop below $2 as early as the start of next year.
Most of the states likely to post lower than $2 gas have three things in common: the general drop in oil prices, proximity to large refineries and low state gas taxes.
The first among these has already begun to have an outsized influence. Oil has fallen below $66. Just five days ago, the price was nearly $80. In late June, it was close to $100. If oil stays below $70, it could knock $0.20 to $0.30 off the average price of a regular gallon of gas nationwide by itself, if the evidence of the past month as an indication. Over that period, the price of gas nationwide has dropped from $3.03 to $2.79, according to GasBuddy.
The eight states were gas prices are likely to fall below $2 are Mississippi, Alabama, Louisiana, Texas, Oklahoma, South Carolina, Missouri and Tennessee.
Several of these are either on the Gulf of Mexico or states adjacent to ones that are. Each already has gas prices below $2.60. In all but one, the price has continued to fall over the past several days.
Mississippi, Alabama, Texas and Louisiana are directly on the Gulf of Mexico and close to the large refineries in Texas, which, taken together, are among the biggest block of refineries in the world. Oklahoma and Tennessee border at least one of these four states. So, each has the advantage that among the variable costs of gasoline is the distance it must travel from refineries to retailers.
Finally, state gas tax rates have a profound effect on total gas prices. An illustration of this is that the state with the third highest gas tax is New York, where it is $0.50. New York also has the third highest gas price in the United States at $3.18. The two states where gas prices are higher — Alaska and Hawaii — are distant from supply.
According to the Tax Foundation, last year, South Carolina had the 47th highest gas tax among all states at $0.168. Oklahoma was 46th at $0.170. Missouri was 45th at $0.173. Mississippi was 44th at $0.188. Louisiana was 38th at $0.20
Gas prices in eight states should be below $2 within a few months.
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.