A combination of OPEC oil-production tightening and sanctions that have strangled the supply of oil from Venezuela and Iran have pushed crude prices to a five-month high of over $63 a barrel. This, in turn, has driven gasoline prices in several states to over $3 a gallon, a list that is likely to grow. The only bright spot is that this year the United States will become the world’s largest oil producer.
The average price of a gallon of regular gas hit $2.74 yesterday, up from $2.46 a month ago, according to AAA. The organization said on April 4 that oil prices were not the only reason for the spike. Its researchers reported: “Refinery maintenance season has hit some unexpected bumps in the road, leading to higher pump prices as the nation settles into spring. According to new data released from the Energy Information Administration (EIA), total domestic refinery utilization — a measure of how much crude and other feedstocks refineries use to make various products, including gasoline — fell to 86.4 percent last week. At this time last year, EIA measured total refinery utilization at 93 percent.” However, no one doubts the rise in oil prices, now up 30% this year, are not the primary cause.
The price of gas has topped $3 a gallon in six states, and the level is closing in on that number in several others, according to GasBuddy. The per-gallon price in California, which has 13% of the U.S. population, is $3.79. The price in Hawaii is $3.47. The price in Washington is $3.25. In neighboring Oregon, it is $3.15. In Nevada, it is $3.06. And in Alaska, it is $3.00. In Illinois, Arizona and Pennsylvania, the price has topped $2.87. Pennsylvania has 4% of the U.S. population, as does Illinois.
While oil prices are the primary reason gas prices are high in some areas, there are two other major components. One is proximity to refineries. States close to the huge refineries on the Gulf of Mexico, particularly those south of Houston, have some of the lowest gas prices in America. Mississippi has the lowest price in the country at $2.43 a gallon. The price in Louisiana is also $2.43, and in Oklahoma and Texas it is $2.47.
The other factor is state fuel taxes. California has the second highest level of gas tax at $0.728 a gallon, against the national average of $0.528, according to the American Petroleum Institute. Washington has the third highest at $0.678. Hawaii is fourth at $0.648. At the other end of the spectrum, the gas tax in Mississippi is the third lowest among all states at $0.372. Louisiana ($0.384), Oklahoma ($0.384) and Texas ($0.384) are all among the eight lowest. Each makes the list of the states with the lowest gas taxes.
Analysts do not believe that the OPEC situation will improve. Sanctions against Iran and Venezuela are likely to stay for some time. Unrest in large oil producer Libya has added to potential supply constraints. This adds up to an overwhelming set of circumstances that could push gas prices higher.
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