Why California Gas Prices Are 50% Higher Than National Average

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U.S. gasoline prices have not moved much in the past month. At $2.63, the average price of a gallon of regular nationwide is four cents lower than a month ago. By state, the story is entirely different. States close to the Gulf of Mexico’s oil fields and the huge refineries south of Houston tend to have gas prices below the national average. States further away and with few refineries have gas prices that can be 75% or more higher.

The price of a gallon of regular in California today is $4.11, according to GasBuddy. In some large cities, it is closer to $4.20. Hawaii is a distant second at $3.64 a gallon. Most of its oil supply is shipped, at considerable cost, from Asia or the West Coast. The cost of refueling in these states may prompt some drivers to consider America’s most eco-friendly vehicles.

In Louisiana, the price for a gallon of regular is $2.24. Not coincidentally, the price is below $2.30 in Oklahoma, Arkansas, Mississippi, Alabama, Texas and South Carolina. Though South Carolina is not near the Gulf, it has a great deal of its own refinery capacity.

Refinery access and oil prices are not the only major contributor to gas price levels. State gas taxes can play a substantial role. As of October 1, the tax on a gallon of gas in California as $0.8045, according to the American Petroleum Institute. This is the highest among all states. The national average is $0.5470 per gallon. Most of the Gulf states have gas taxes below $0.40 a gallon. Missouri is the second-lowest of all states at $0.3582. Mississippi’s is $0.3719, Oklahoma’s is $0.3840, while Louisiana’s is $0.3841.

Despite huge differences among the states, gas prices, in general, have not moved much recently because of oil prices. Crude has not traded much outside a range of $52 to $55 a barrel. The spike caused by the attacks on oil tankers in the Strait of Hormuz ended in August. Supply from OPEC and the shale-rich fields in the United States have not changed much. While the global economy may have slowed, demand has not wavered much either.

Based on the gas tax, refinery and transportation costs issues, the divide between California and the Gulf states almost certainly won’t change. Check out what a gallon of gas cost the year you were born.