The 10 States With the Cheapest Gas

March 1, 2013 by Mike Sauter

Since the start of the year, gasoline prices have risen by more than 49 cents — the biggest increase in the first two months of any year on record. The current national price, which is just under $3.80, is the most expensive gas has been since October. Once again, $4.00 per gallon nationwide is beginning to look like a real possibility.

Already, gas prices in four states are at least $4.00 a gallon, and in another three states they are just 10 cents away. There are, of course, other states where the price of gas remains closer to $3.00 a gallon than $4.00 a gallon, despite the recent massive increase in prices. In Wyoming, filling up the tank of a F-150 — the most popular vehicle sold in America last year — would cost roughly $85. In Hawaii, that same tank would cost $113.49. Based on the latest fuel prices posted by the American Automobile Association, 24/7 Wall St. reviewed the 10 states with the cheapest gas.

While the northern leg of the Keystone XL pipeline awaits U.S. State Department approval, the cheap oil coming from the Bakken Shale region is largely staying in the northwest region and the Rockies. Those states are the main beneficiaries because Bakken crude sells for less than oil originating in the southern states or abroad. If oil is only transported within the state, less transportation expenses are tacked onto the final price and gas prices in those states are cheaper.

As a result, four of the five cheapest states are in the Northwest or Rocky Mountain region. These include Wyoming and Montana, which have the cheapest and second-cheapest gas in the country and where essentially all the Bakken oil is refined. As of January 1, those two states had 10 operating refineries between them. Relative to its population, Wyoming had the third-highest operating oil refinery production per day. Montana had the fifth highest.

While proximity to cheap oil is important, gas taxes also clearly have a big impact on how much people finally pay at the pump. Six of the 10 states with the lowest prices have an added state and federal tax of less than 40 cents per gallon, compared to a national average of nearly 50 cents. The four states with relatively higher taxes — Montana, Utah, Idaho and Colorado — are among those states benefitting from their proximity to Northwest oil production.

24/7 Wall St. ranked the 10 states with the lowest gas prices based on data from the American Automobile Association’s Daily Fuel Gauge Report. The prices are as of February 27. The Median household income for 2011 and population data for 2012 was obtained from the U.S. Census Bureau. The U.S. Energy Information Administration provided us with the number of refineries by state. Gas tax rates for January 1, 2012, came from the American Petroleum Institute. We also reviewed data on the relative cost of transportation in the fourth quarter of 2012 for each state, provided by the Missouri Economic Research and Information Center.

These are the 10 states with the cheapest gas.

10. Tennessee
> Price/gallon: $3.62 (tied for 9th)
> Population: 6.5 million (17th highest)
> Gas taxes per gallon: 39.8 cents (15th lowest)
> Cost to fill F-150: $94.17
> Operating refineries: 1 (tied-23rd highest)

Just as they did across the country, gas prices in Tennessee have climbed sharply in the past month, rising from $3.18 per gallon to $3.62 per gallon. However, relative to other states, its standing actually has improved during that time. Tennessee had the 14th lowest gas prices just a month ago, yet it was tied for ninth lowest among all states as of Wednesday. The relative lower gas prices when compared to other states provide some relief to Tennessee residents who have lower incomes than residents living in most of the country. The state’s median household income in 2011 was $41,693, the sixth lowest in the country and nearly $9,000 lower than the national median. With gas prices clearly a key factor, the state had the third-lowest cost of transportation of all states in the fourth quarter of 2012.

9. Oklahoma
> Price/gallon: $3.62 (tied for 9th)
> Population: 3.8 million (23rd lowest)
> Gas taxes per gallon: 35.4 cents (5th lowest)
> Cost to fill F-150: $94.17
> Operating refineries: 5 (tied for 6th highest)

Oklahoma is one of the nation’s largest oil producers. The state has five operating oil refineries and can produce nearly 509,000 barrels of oil a day — both among the highest figures for any state. At just 35.4 cents a gallon, only four states charge less in taxes on gasoline. Nationwide, Americans spend an average of 48.8 cents a gallon in taxes. In addition to being a key oil producer, Oklahoma is also one of the largest natural gas producers in the United States.

8. Missouri
> Price/gallon: $3.61
> Population: 6.0 million (18th highest)
> Gas taxes per gallon: 35.7 cents (6th lowest)
> Cost to fill F-150: $93.73
> Operating refineries: 0

A week ago, Missouri had the 14th-lowest gasoline price in the country. Now it has the eighth lowest. The state has no operating refineries of its own, but it is adjacent to several large refining states, notably Oklahoma and Illinois. Taxes on gas in the state are the sixth lowest in the country, with drivers paying just 35.7 cents per gallon at the pump. Filling up the tank of an F-150 pickup costs Missouri drivers $19.76 less than it does in Hawaii, which has the nation’s highest gas prices.

7. South Carolina
> Price/gallon: $3.60
> Population: 4.7 million (24th highest)
> Gas taxes per gallon: 35.2 cents (4th lowest)
> Cost to fill F-150: $93.57
> Operating refineries: 0

Although gas prices have shot up in the state in the past month, South Carolina has drastically improved its standing relative to other states in that time. Although a month ago gas prices in the state were just $3.19 a gallon, they were the 17th lowest gas prices in the country. Last year at this time, the average gas price in the state was $3.54 a gallon, the ninth lowest in the country. The federal gas tax in South Carolina is 18.4 cents a gallon, and state gas taxes and fees total just 16.8 cents a gallon, the fourth lowest of all states. Unlike most states where gas prices are low, South Carolina has no operating refineries.

6. Colorado
> Price/gallon: $3.59
> Population: 5.2 million (22nd highest)
> Gas taxes per gallon: 40.4 cents (17th lowest)
> Cost to fill F-150: $93.39
> Operating refineries: 2 (tied for 17th highest)

Although Colorado’s gas prices are still among the lowest in the country, the state used to fare better against its peers. Just a month ago, gas prices in Colorado were a just $2.96 per gallon, the only state except for Wyoming where average gas prices were under $3 a gallon. A year ago, the average price was $3.16 a gallon, the second-lowest of all states. Like in many Western states, Colorado’s refineries can buy Canadian crude oil at cheaper prices than other parts of the country, helping to push down the total cost at the pump.

5. New Mexico
> Price/gallon: $3.49
> Population: 2.1 million (15th lowest)
> Gas taxes per gallon: 37.3 cents (8th lowest)
> Cost to fill F-150: $90.64
> Operating refineries: 2 (tied for 17th highest)

New Mexico is one of just five states where the average gas price was below $3.50 a gallon as of Wednesday. Drivers benefit from low taxes, paying just 37.3 cents per gallon in taxes, among the nation’s lowest rates. But like the rest of the nation, prices in New Mexico have risen recently. In late January, a gallon was just $3.04, or 45 cents less than the current price. In a state where the median household income was among the nation’s lowest, at $41,963 in 2011, this steep increase could make gas far less affordable for many residents.

4. Idaho
> Price/gallon: $3.45
> Population: 1.6 million (12th lowest)
> Gas taxes per gallon: 43.4 cents (25th lowest)
> Cost to fill F-150: $89.75
> Operating refineries: 0

The price of a gallon of gas in Idaho is up by 36 cents compared to just a month ago, one of the smallest increases compared to other states. While the state is not part of the Bakken Shale formation and has no operating refineries of its own, it is located immediately next to states like Montana, which is part of the formation, and Wyoming, which has six operating refineries.

3. Utah
> Price/gallon: $3.43
> Population: 2.9 million (17th lowest)
> Gas taxes per gallon: 42.9 cents (24th lowest)
> Cost to fill F-150: $89.13
> Operating refineries: 5 (tied for 6th highest)

One month ago, the price of a gallon of gas in Utah was just $3.00. But as the price of a gallon has risen an average of 44 cents nationwide, prices in Utah have kept pace. The state did not always have cheap gas prices. As recently as November 2012, Utah actually had far higher gas prices than the national average. According to the EIA, the state’s five refineries primarily process crude oil from many of the other states on this list and from Canada. Last year marked the completion of a pipeline that now transports gasoline from Wood’s Cross, Utah, to Las Vegas.

2. Montana
> Price/gallon: $3.28
> Population: 1.0 million (7th lowest)
> Gas taxes: 46.2 cents (22nd highest)
> Cost to fill F-150: $85.23
> Operating refineries: 4 (tied for 9th highest)

Montana has the second-lowest gas prices of all states, improving from third lowest a month ago and fourth lowest a year ago. Montana’s low gas prices cannot be attributed to low taxes since taxes are higher than the majority of states. Rather, the state’s prices are a result of the availability of its own oil resources and its proximity to other oil producing areas in the U.S. and Canada. Canadian crude oil is available for a lower price in the area and the eastern part of Montana — along with western North Dakota — is part of the Bakken Shale, which has been opened up to more extensive drilling in recent years.

1. Wyoming
> Price/gallon: $3.27
> Population: 576,000 (the lowest)
> Gas taxes: 32.4 cents (2nd lowest)
> Cost to fill F-150: $85.07
> Operating refineries: 6 (tied for 4th highest)

Wyoming’s oil deposits and multiple oil refineries have consistently helped lower gas prices in the state enough that they have been the cheapest in the country for some time now. Although prices currently remain the lowest in the U.S., Wyoming previously held that distinction more firmly than it does now. Last month, gas prices were just $2.84 a gallon — 12 cents less than the next-lowest state. Total gas taxes in the state are just 32.4 cents a gallon, lower than any other state except Alaska. The lower gas prices have also helped make Wyoming the most affordable state in terms of transportation.