The national average price for a gallon of regular gasoline has fallen to $2.01, as oil prices have plunged below $36. The ripple effect already has begun to show as gas prices have dropped below $1.60 in some parts of the country
All the cheap-gas cities, small towns and counties are in states where prices are well below the national average. Almost all of these are close to refineries, in states with low fuel taxes or both. Texas, Louisiana, Alabama, Mississippi, Missouri and South Carolina are among these. Gas prices in most of these are below $1.80 a gallon.
According to GasBuddy, there are a number of areas where gas prices are below $1.60. In Belton, Mo., the least expensive gas price is $1.57. In Calhoun County, Texas, gas is well under $1.60 in some stations. Areas with gas prices this low are littered across the GasBuddy gas price map of the United States.
Much of the “new normal” of gas prices relies on a very few factors. Prices are driven primarily by just four factors: oil prices, proximity to refineries, refinery capacity and state taxes and levies. The recent decision by Saudi Arabia to continue to keep its oil exports high has almost dissolved the OPEC cartel. This guarantees oversupply of crude.
Slowing national economies in the largest countries, including China, will lower demand. The cost of producing oil from shale deposits is greater in some cases than what it can be sold for; nonetheless, parts of this industry continue pumping, increasing supply.
Several states house large refineries or are close to those that do. This is particularly the case near the Gulf of Mexico, and the massive refinery operations south of Houston. Some owned by Exxon Mobil Corp. (NYSE: XOM) pump several hundreds of thousands of barrels per day.
Gas prices in several states are low in large part because of the level of state and federal taxes and levies. The American Petroleum Institute’s October state fuel tax report put the national average at $0.4869 per gallon. However, in South Carolina, a state with extremely low gas prices, that figure is $0.3515. In the Gulf Coast states, the tax level is $0.3719 in Mississippi, $0.3840 in Texas and $0.3841 in Louisiana.
Gasoline prices of $1.60 per gallon will only spread.
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