The best predictor of gasoline prices is oil prices. They almost always outweigh refinery costs, transportation costs and state gas taxes. Crude oil prices, which were $36 a barrel at the end of November, have risen to almost $60, the highest price in a year. Gas prices have started to follow. In three states, they have topped $3 a for a gallon of regular.

According to AAA Fuel Gauge, the average price for a gallon of regular nationwide is $2.631. That is up from $2.505 a month ago. Over the past four weeks, the increase has been fairly steady.

Oil prices have risen for three reasons, none of which is likely to change soon. The first is that global stockpiles have fallen. World Oil recently said of crude inventories:

Crude inventories at a key storage hub in the U.S. are now below their five-year average, and nationwide inventories continue to slump, an early indication that Saudi Arabia and allied producers are succeeding in their efforts to eliminate a glut.

The other factor has been called “post-vaccine euphoria.” The base of this is that the economy has already started to spring back from the COVID-19 pandemic. If the rate of vaccine distribution quickens, global economies will reopen and gross domestic product and employment will surge, and with these, the demand for oil.

Finally, refinery shutdowns due to the huge cold and snowstorms that have run through Texas. These massive refineries are critical to U.S. supply.

Gas prices by state are either above or below the national average for several reasons. The first is proximity to refineries. States near the huge refineries along the Gulf of Mexico tend to have the lowest prices in the country. Notably, the four states with the lowest per-gallon gas prices are Mississippi ($2.25), Texas ($2.30), Oklahoma ($2.33) and Louisiana ($2.26). The transportation costs from refineries to nearby areas shaves the average price of gas down, compared with much of the rest of the nation.

Another primary factor is gasoline taxes. According to the American Petroleum Institute survey of state gas taxes as of January 1, the U.S. average is $0.5523 a gallon. States with low gas taxes include Missouri ($0.3582), Mississippi ($0.3719) and New Mexico ($0.3738). The states with the highest gas taxes are California ($0.8145) and Pennsylvania ($0.7710). These are the states with the highest gas taxes in America.

Three states currently have average prices for a gallon of regular of over $3. California’s $3.452 price is clearly affected by its gas tax. In Hawaii, the price of $3.288 is affected by a relatively high gas tax at $0.6524 per gallon. However, the cost of transportation to islands that are 2,500 miles from the west coast is also a major contributor to Hawaii’s price. And, the price for a gallon of regular in Washington State is $3.10. Its gas tax is a high $.678.

Gas prices nationwide were last at $3 a gallon in 2014. There is still a long way to go before prices reach that level again. However, crude prices are on a sharp climb upward, which means gas prices will continue to increase, for now, as well. Moreover, gas prices can affect overall living costs in some places. This is the cost of living in every state in America.

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