Energy Business

The 11 States with the Highest Gas Prices

Did your recent trip to the gas station feel like it took a higher toll than normal on your wallet? It probably wasn’t your imagination. Average gasoline prices in the United States increased by 5.1%, or 17 cents a gallon, during July, according to the AAA July 2012 Monthly Gas Price Report. This was the first monthly increase since March. It was also the highest increase in prices for the month of July since at least 2000 — the first year AAA began recording prices.

Read: The 11 States with the Highest Gas Prices

“Higher global oil prices and increased demand for gasoline during the busy summer driving season were the primary factors that sent pump prices higher in July,” AAA spokesman Avery Ash said in a statement. AAA went on to note than an increase in gas prices was due to “rising crude and ethanol prices, geopolitical concerns in the Middle East and mixed economic news surrounding the global economy.”

The price of gas has been rising across the country, but it varies vastly from state to state. Different factors play a role in determining a state’s average gas price, including taxes, production in the state and transportation costs. Based on the AAA report, 24/7 Wall St. identified the 11 states with the highest gas prices as of July 31.

In June, 24/7 Wall St. identified the 10 states with the lowest gas prices — four of them were located on the Gulf Coast. Production of West Texas Intermediate (WTI) oil, an increasingly cheaper form of crude oil, takes place primarily in the Gulf Coast region. None of the states on this list, however, are located in that region — most of them are in the northern U.S., the Northeast or outside the continental U.S., equating to high transportation costs for shipping oil.

Furthermore, states with the highest gas prices tend to have the highest gas taxes. Eight of the 11 states on this list were ranked in the top 10 in terms of gas taxes, which includes state excise taxes along with other state taxes and fees. While the average state tax in the U.S. is 30.5 cents a gallon, four of the states on this list cracked 40 cents a gallon. The notable outlier was Alaska, which despite coming in second for this list, charges only eight cents a gallon in taxes. That is lower than any other state on this list.

In compiling a list of the states with the highest gas prices, 24/7 Wall St. referred to daily data on gas prices provided by AAA. Besides the current gas prices, we looked at prices from a day ago, a week ago, a month ago and a year ago, along with the percentage change between now and a year ago. We considered current gas taxes with information provided by the American Petroleum Institute. We factored in the role of oil production by state as of the beginning of 2012, as measured by the Energy Information Administration. To get a sense of how gas prices lined up with other costs, we looked at a cost-of-living index provided by the Council for Community and Economic Research. Finally, we looked at the June unemployment rate provided by the Bureau of Labor Statistics as one way to gauge how well a state can handle its gas prices.

These are the 11 states with the highest gas prices.

11. Oregon
> Regular gas price per gallon: $3.64 (tied for 10th)
> Tax per gallon: 31 cents (17th highest)
> Number of oil refineries: 0

Though a total of 21 refineries are found in three states on the West Coast, not one of these is in Oregon. The absence of any local gasoline-producing facilities likely serves to increase prices far more than taxes do. Though gas is taxed at a rate of 31 cents per gallon, just half a cent more than the national average, the price per gallon is 14 cents higher in Oregon than it is nationwide. Recently the disparity between state and national prices actually has decreased, as last month a gallon of regular in Oregon cost $3.63 versus $3.33 nationwide.

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10. North Dakota
> Regular gas price per gallon: $3.64 (tied for 10th)
> Tax per gallon: 23 cents (tied for 20th lowest)
> Number of oil refineries: 1

Despite the presence of the Bakken shale oil field, North Dakota has just one refinery for transforming oil into gasoline. In the past month, gas prices in North Dakota have risen by 11 cents. Though this was less than the 17-cent increase seen nationwide, gas still costs 14 cents a gallon more than the national average of $3.50. Fortunately, the effects of North Dakota’s relatively high gas prices may be partially relieved by the lowest utility costs in the nation, according to the Council for Community and Economic Research. And even with high gas prices, transportation costs are still the fifth lowest in the nation. Meanwhile, the unemployment rate of 2.9% helps further ease the economic burden on the state.

9. Rhode Island
> Regular gas price per gallon: $3.65
> Tax per gallon: 33 cents (13th highest)
> Number of oil refineries: 0

Taxes and production factors contribute to Rhode Island’s high gas prices. The tax of 33 cents a gallon is slightly higher than the U.S. median of 30.5 cents. Meanwhile, no oil refineries are located in Rhode Island, and no oil production takes place in states nearby, thus adding extra transport costs to gasoline. Making the high-gas-price burden even more painful is the state’s 10.9% unemployment rate, the second highest in the country after Nevada’s 11.6%. Fortunately, gas prices have gotten better for Rhode Islanders in the past year, dropping 5.52%, a higher rate than all states on the list except Connecticut.

8. Washington
> Regular gas price per gallon: $3.67
> Tax per gallon: 37.5 cents (9th highest)
> Number of oil refineries: 5

Although Washington has five refineries that process more than 630,000 barrels a day — the fifth-highest figure among all states — gas prices are still 17 cents above the national average. This is partly due to the state’s high excise tax rates, which amount to 37.5 cents per gallon and account for all state taxes on gasoline. There are some positives, however: Over the past month, when gas prices rose an average of 17 cents nationwide, the cost of a gallon of regular in Washington rose by only about one cent.

7. Michigan
> Regular gas price per gallon: $3.71
> Tax per gallon: 39.5cents (6th highest)
> Number of oil refineries: 1

Though gas prices in Michigan are about 10 cents lower than they were a year ago, recent price trends in Michigan have been largely upward. A month before, a gallon of gas cost $3.42, but by July 31 the price had risen to $3.71 per gallon — an increase of 8.49%. Though, at 19 cents per gallon, the excise tax on gas is lower than in more than half of all states, residents pay an additional 20.5 cents in other state taxes and fees. Because of this, the total taxes on a gallon of gas in Michigan are sixth highest in the nation.

6. Illinois
> Regular gas price per gallon: $3.72
> Tax per gallon: 39.7 cents (5th highest)
> Number of oil refineries: 4

While the Illinois excise tax of 19 cents is below the U.S. average of 21 cents, the state charges an additional 20.7 cents in other state taxes and fees. That is the fifth highest of all states and higher than all but two states on this list. Meanwhile, prices at the pump sting a little more since the unemployment rate in Illinois is 8.7% as of June, topping the national average of 8.2%. If you live in Illinois and are near a state line, you might consider a drive across the border. Gas prices average $3.33 in Missouri, $3.47 in Kentucky and $3.57 in Indiana.

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5. New York
> Regular gas price per gallon: $3.77
> Tax per gallon: 49.3 cents (tied for the highest)
> Number of oil refineries: 0

Even more than in Illinois, New York’s gas prices are due to high gas taxes. While the state only levies an 8.1-cent excise tax, another 41.3 cents is tacked on in other state taxes and fees, a higher charge than in any other state. Meanwhile, New York has the third-highest cost of living out of all 50 states. Taxes, the high cost of living and the fact that New York has no oil refineries means that drivers can expect to pay a hefty price at the pump. It does not help that many New Yorkers are without work. The state’s 8.9% unemployment rate, up from 8.2% in June 2011, rose more in the past year than any other state in the country. It is the only state on this list to see a higher percentage of people unemployed now than a year ago.

4. California
> Regular gas price per gallon: $3.80
> Tax per gallon: 49.3 cents (tied for the highest)
> Number of oil refineries: 16

Gasoline prices in California, as in New York, can be partially explained by high taxes. Californians pay as much in state taxes as New Yorkers, and more than residents of any of the other 48 states. The state’s excise tax rate, 36 cents per gallon, is the third highest in the nation. These taxes likely help offset any price benefits consumers might receive from having 16 operating refineries in the state, processing 1.96 million barrels of oil a day. Though the price of gas in the state has risen about 1.25% in the past month, this is a smaller increase than in all but 13 other states.

3. Connecticut
> Regular gas price per gallon: $3.82
> Tax per gallon: $0.45 (4th highest)
> Number of oil refineries: 0

Connecticut has the highest gas prices in the continental U.S., as well as the second-highest transportation costs in the country — behind only Hawaii. Furthermore, not only does Connecticut not have any refineries, but not one state in New England had an operating refinery as of the beginning of this year. Additionally, residents pay the third-highest gas tax rates in the country — 45 cents split between a 25-cent excise tax and 20 cents in other taxes.

2. Alaska
> Regular gas price per gallon: $4.00
> Tax per gallon: 8 cents (the lowest)
> Number of oil refineries: 6

Just because oil production is a major industry in Alaska and the state has the lowest taxes per gallon of gas, that does not mean filling up the tank is cheap. Alaska still manages to have the second-highest gas prices in the U.S. and is only one of two states to crack $4 a gallon for regular. The state has the second-highest cost of living after Hawaii, certainly supported by the high gas price. The cost of utilities is the second highest behind Hawaii, and the cost of transportation is third highest behind Hawaii and Connecticut.

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1. Hawaii
> Regular gas price per gallon: $4.15
> Tax per gallon: 48.3 cents (3rd highest)
> Number of oil refineries: 2

As of the end of July, Hawaii had the highest gas prices in the country. This is nothing new for Hawaiians, who paid the highest price nationwide last week, last month and last year. Residents also pay 48.3 cents per gallon in state taxes, the third-highest rate in the country. The relative cost of living in Hawaii is the highest in the nation, as are transportation and utilities costs. Since the end of July 2011, Hawaii is the only state in the U.S. that has seen a net increase in price. There has been some relief recently; though gas prices rose across the country in the past month, prices fell 12 cents per gallon in Hawaii.

Samuel Weigley and Alexander E. M. Hess

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