Gasoline prices have dropped toward decade-old lows recently. The primary trigger is crude oil prices. Crude temporarily dropped below $15 a barrel, but that has changed. It has risen toward $30. However, that is well below the start of the year when the price was over $60 a barrel.
Prices have fluctuated based in part on supply from Saudi Arabia and Russia. The coronavirus pandemic has tamped down demand as well. This is another factor in the plunge of prices.
Gasoline prices in the United States collapsed a month ago. Some cities had stations where gas was below $1 a gallon. In several states near the Gulf of Mexico, prices dropped to an average of less than $1.20 for a gallon of regular across the entire state.
The prices have rebounded somewhat everywhere. The states with the cheapest gas now have per-gallon prices of under $1.50. The universe of those is dwindling. However, in nine cities, the price is below that.
|Greenville, South Carolina||1.481|
|Little Rock, Arkansas||1.459|
|San Antonio, Texas||1.416|
The Gulf States are likely to have the lowest prices throughout the balance of the year. They are near the refineries south of Houston. Prices are depressed by abundant supply and the proximity of gas stations to refineries.
The price of gas transportation can affect costs. It is why Hawaii has the highest average gas prices among all states by far.
The states that currently have the lowest gas prices, according to GasBuddy, are Mississippi at $1.50 and Oklahoma at $1.51. Just above that, the price in Arkansas is $1.53. The price in Texas is $1.55, and in Alabama the price is $1.56.
The national average price for a gallon of regular is $1.88.
These low-priced gas states also tend to be in places with very low gas taxes. According to the American Petroleum Institute, the average state gas tax per gallon is $0.5453.
In most of the low gas price states, the number is well below that. In Mississippi, the tax level is $0.3719. In Oklahoma and Texas, the figure is $0.3840.
The API also points out that the tax trend has helped consumers. Its researchers wrote, “The nationwide average tax on gasoline is 54.53 cpg, down .17 cpg from the October 2019 study.”
At the other end of the state gas tax spectrum, the gas tax in California is $0.790 per gallon. In Pennsylvania, it is $0.771.
One reason prices may not snap back above the $2.50 level where it was at the start of the year is lack of demand. As businesses and people continue to be part of the stay-at-home economy, traffic has fallen sharply. In some cities, the level is down by more than half. The volume of customers at gas stations may remain low for months.
Ironically, low gas prices have helped consumers over the years. The price of gas is often a large portion of household expenditures, particularly among lower- and middle-class households.
Across the country, the price of gas will remain low, but in some areas, it will be much lower than others.