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US gasoline prices

Hydrocarbon Engineering,

Gasoline prices in the USA are currently close to the lowest prices seen in the last three years. At the end of the summer gasoline prices were at US$ 3.60 /gal. but have dropped to an average of US$ 3.22 /gal. Compared to last year, a gal. is roughly a quarter cheaper.

Varying prices: Why?

There are several reasons why prices have fallen. The decreasing involvement of the US in Syria has been mentioned. However, it is more likely that North American oil production along with better rail transportation to refineries is pushing crude prices down. It has also been suggested that in the long term, vehicle fuel efficiency is increasing and forcing the demand for gasoline down, along with pump prices.

Across a country as large as the US, there are of course widely varying prices at the pump. In states such as California and Alaska, gas is over US$ 3.50 /gal. In Hawaii it has hit an average of US$ 4.05 /gal. However looking at the lower end, there are some states which fall below the national average of US$ 3.22 gal. Missouri is amongst those, as gasoline is only US$ 2.86 /gal.

When it comes to determining what price to charge at the pump, there are several factors to consider;

  • Proximity to oil refining capacity
  • Gas taxes
  • Cost of transportation from refinery to pump

Capacity and transportation

Unsurprisingly, many states with the cheapest prices have a great deal of refining capacity and states like Hawaii have none. Total US refining capacity is approximately 16.7 million bpd and six US states which are home to some of the cheapest gasoline have 300 000 bpd capacity each. Texas and Louisiana both have cheap gas and have the largest and second largest refining capacities in the US. Texas alone can refine over 4.75 million bpd.


Regional gas taxes are possibly, however, the most important factor when determining the cost at the pump. Federal tax comes in at 18.4 cents /gal., but state and local taxes range anywhere from an additional 12.4 cents /gal. in Alaska to 53.4 in California. The average works out as 31.1 cents /gal.

Cost of living

Finally, it is the regional cost of living is another factor that can impact the price at the pump. The relative cost of consumer goods in states with cheaper gas is lower than the US average, according to the Council for Community and Economic Research.

Want to know which are the 10 US states with the cheapest gasoline prices and why?

Adapted from press release by Claira Lloyd

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