Gas prices are skyrocketing at the pump, but certain states are getting hit harder than others.
California drivers had to pay, on average, $5.70 per gallon as of Thursday. But just across its southeastern border in Arizona, the average price dropped more than $1 to $4.55. Prices are even lower as you head northeast, with the average in Kansas at $3.82.
So why do prices vary so much across state lines? The short answer: state taxes and proximity to oil refineries and pipelines, according to oil and gas experts.
“We’re all subject, more or less, to the same crude oil prices,” said Hugh Daigle, an associate professor at The University of Texas at Austin’s department of petroleum and geosystems engineering. “But a lot of the big drivers that cause (price) differences from state to state are distribution costs and state taxes.”
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Why are gas prices higher in some states?
Oil needs to make a number of stops before it’s turned into gasoline that is ready to fill your car’s tank and that journey influences its final price at the pump.
First, crude oil is either imported into the US or produced domestically and moved to a refinery, where it is made into gasoline and other petroleum products.
Most gas is then moved via pipeline to large storage terminals before being sent to smaller blending terminals, where it’s processed into finished motor gasoline. Trucks then deliver the gasoline to gas stations.
A gas station’s proximity to those refineries and pipelines plays a big role in the price at the pump. Stations that are farther away pay higher transportation costs to get the gas to the fueling station, which drives up overall costs.
GasBuddy spokesperson Nicole Petersen pointed to states on the West Coast like California, Oregon and Washington, which have less access to refineries and tend to have some of the highest gas prices in the country.
So why not just build more oil refineries?
“Regardless of what state you’re in, building an oil refinery is not a simple task,” Daigle said, who noted that refineries are “extremely expensive” and take a while to build.
“You combine that with the existing political climate in California which might not be so favorable to building new refinery infrastructure, and it compounds the problem,” he said.
Additionally, pipeline infrastructure is difficult to build out for a variety of reasons, including cost, environmental concerns and geographic challenges such as the Rocky Mountains along the West Coast.
“It’s harder for pipelines to cross those boundaries across the country over the Rocky Mountains,” Petersen said. “So it limits the number of pipelines that can connect that region to oil supply. That bumps up the costs a lot.”
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Gas taxes drive up fuel costs
Drivers in every state face the same federal gas tax, which adds about 18 cents per gallon and helps fund highways. But state taxes range across the country.
Total gasoline taxes (state taxes plus the federal gas tax) start as low as about 34 cents per gallon, as in Alaska. The highest gas tax is in California, which charges about 87 cents per gallon, according to the American Petroleum Institute.
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While location and taxes are the leading factors in price discrepancies across states, there are various other factors at play. High costs of doing business in a state can also contribute to higher gas prices, as well as a pump’s proximity to competing gas stations.
Additionally, Petersen said California gas is more expensive because the state has “unique requirements” for its fuel blends, which are better for the environment but more costly.
“A lot of other states aren’t concerned with that kind of thing,” she said.
What’s the average gas price for each state?
So which states have the most expensive gas?
Petersen said Southern states tend to have the cheapest gas since they’re closer to refineries and have lower taxes.
Meanwhile, West Coast states tend to get hit with both higher state taxes and less access to refineries, driving up overall gas prices.
The top 10 states for gas prices and the average price-per-gallon in each state as of Thursday, according to AAA:
- Calif. $5,694
- Nevada $4,872
- Hawaii $4,810
- Washington $4,707
- Alaska $4,680
- Illinois $4,570
- District of Columbia $4,500
- Conn. $4,475
The bottom 10 states:
- Missouri $3,850
- Oklahoma $3,852
- North Dakota $3,890
- Iowa $3,921
- South Dakota $3,946
- Colorado $3,953
- Minnesota $3,954
Follow USA TODAY reporter Bailey Schulz on Twitter: @bailey_schulz.
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