Energy Economy

The 8 Cities With the Highest Gas Prices

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.

Gas prices have rebounded, but they never dropped much in several cities where the price per gallon for regular gas is above $2.80. A total of 14 states have gas prices that are over $2.00, and the universe of these is growing, according to GasBuddy.

These eight cities have gas prices over $2.80 a gallon.

City Price
Santa Barbara, California 3.006
Honolulu, Hawaii 2.983
San Francisco, California 2.956
San Jose, California 2.886
Los Angeles, California 2.851
Ventura, California 2.849
Orange County, California 2.841
Oakland, California 2.820

The primary reason for the high prices in California is transportation costs. This is also true in Hawaii. The island state has much of its fuel shipped from Asia and the western coast of the United States.

Some of California’s refineries have been shuttered recently, which makes the supply issue even greater and pushes the state’s price higher.

At the other end of the spectrum, 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.

These states with low priced gas also tend to have very low gas taxes. According to the American Petroleum Institute, the average state gas tax per gallon is $0.5453.

California drivers are clobbered by gas taxes, which are the highest in the nation at $0.79 per gallon. Hawaii has the fifth-highest tax at $0.6677 a gallon.

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.”

California and Hawaii are clearly among the places where this advantage does not apply.

Gas prices across the United States will not snap back above the $2.50 average, where they were at the start of the year, because of a 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. However, that does not entirely offset high gas taxes and high transportation costs in some regions.

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. In high gas price states, this will not apply.

Across the country, the price of gas will remain low, but in some areas it will stay much higher than in most.