Energy Business

The Six States (and D.C.) With the Highest Gas Prices

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Gasoline prices have risen more than 13% during the past month, and the chance that the average price per gallon nationwide could reach $4.00 has become a real threat again. AAA’s Fuel Gauge statistics show that the average reached $3.73 over the Presidents’ Day weekend.

A national view of the numbers only tells a portion of the story. In some states, the average price per gallon has moved above $4.00, and several others they are very close to that benchmark. Nearly a third of the U.S. population lives in a state where gas prices are within ten cents of the $4.00 mark or higher. 24/7 Wall St. reviewed the six states (and D.C.) with the highest gas prices.

Click Here to See the Six States and D.C.

Economists constantly debate the effects that gas prices have on consumer spending on other items, in addition to what people have to pay for their homes, cars, food and clothing. For people without cars, it is easy to measure. For people who need to commute to work, drive children to school, and shop regularly, the difference between gas at $3.30 and gas close to $4.00 could be several hundred dollars a year. That can be a substantial burden for a family, with the U.S. median household income of just over $50,000 — before taxes.

Overall, gas prices tend to be driven by oil prices, the distance that a state is from refineries, refinery activity, and, as much as anything else, state gas taxes. Oil prices have risen by about $10 in the past month, and were back near $100 a barrel earlier this month. The price has not been that high since September. Some of the increase in price can be attributed to the improving economies of the developing world, particularly China. Other reasons include ongoing tension in the Middle East.

Other than crude oil prices, refinery locations also appear to have a direct relationship to gas prices. There are 144 operable oil refineries in the United States, producing more than 17 million barrels of oil each day. Many of the states with the lowest gas prices are located in or near states with substantial refining capacity relative to population. Wyoming and Montana, which have the lowest gas prices in the country, have extremely high oil production relative to the size of their populations. In high-price states, production is often either nonexistent or very low relative to population size.

High gas taxes also tend to drive up prices at the pump. States such as Wyoming, Arizona and New Mexico — all of which have among the cheapest gas prices — have total taxes on gas of less than 20 cents per gallon. Among the 10 states with the highest gas prices, all but one has at least a 20-cent tax per gallon, and several are more than double that. California, which has the second highest cost of fuel per gallon, has a tax of more than 50 cents per gallon.

To review the states with skyhigh gas prices, 24/7 Wall St. looked at current prices based on AAA data. To access the impact on the total population, we looked at 2011 Census data by state. We also reviewed the U.S. Energy Information Administration’s 2012 Refinery Capacity Report, which breaks out production by state based on barrels produced per calendar day. Finally, we looked at gas tax per state figures from the U.S. Tax Foundation.

These are the seven states with sky-high gas prices.