Gasoline prices continue to fall, nearly in lockstep with oil. The national average for a gallon of regular is $2.30, down from $2.51 a month ago and $3.34 a year ago. The price, however, varies widely by state, driven primarily by state taxes and proximity to large refineries. If low gas prices affect consumer spending, these states should benefit the most.
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The spread across the states has a high of $3.04 in Alaska and a low of $1.96 in South Carolina, according to the AAA Fuel Gauge. Six states have average prices for a gallon of regular below $2. Besides South Carolina, they are Tennessee ($1.99), New Jersey ($1.98), Mississippi ($1.97), Louisiana ($1.99) and Alabama ($1.98).
Mississippi, Alabama and Louisiana sit along the Gulf Coast, close to a huge cluster of refineries south of Houston. New Jersey has several large refineries, as does South Carolina. Tennessee borders Alabama and Mississippi.
According to the American Petroleum Institute (API), the average cost of federal and state taxes per gallon of gas is $0.49. The states with the lowest taxes are well below that. New Jersey’s are the second lowest in the United States at $0.33 per gallon. That is followed by South Carolina ($0.35), Mississippi ($0.37), Louisiana ($0.38), Alabama ($0.39) and Tennessee ($0.40).
As to the question of improved consumer spending, in theory people who have gas prices as a major part of their household spending should have more discretionary income. Also, in theory, this should help the middle class more than people with a great deal of money. Among the questions economists debate is whether people who pay lower prices for gas spend that, and help gross domestic product, or they pay debts or save the money.
Methodology: The AAA Daily Fuel Gauge Report is a public service of the United States of America’s largest motoring and leisure travel membership organization and is updated daily by Oil Price Information Service (OPIS) with average national, state and local prices for gasoline, diesel and E-85. Every day up to 120,000 stations are surveyed in cooperation with WEX Inc. for unmatched statistical reliability.
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