Gas Jumps Above $3 in 4 States

Gas prices are affected primarily by the price of three things. These are the price of crude, refinery capacity and its proximity to consumers, and state taxes.

The average cost of a gallon of regular is $3.06 in Alaska, $3.15 in Nevada, $3.20 in Hawaii and $3.70 in California. The average state, federal and excise taxes across all 50 states is $0.4885, according to the American Petroleum Institute. The tax rate is sharply higher in California at $0.6598. In Hawaii, the comparable figure is $0.6206. The figure is $0.5155 in Nevada.

Alaska is at the other end of the scale with total state, federal and excise taxes per gallon at $0.2970. Unfortunately for Alaska’s residents, the state has only six refineries, the largest of which puts out 127,459 bbl/d. By contrast, Texas has 12 refineries that are larger than the largest Alaskan refinery based on capacity. A significant part of Alaska’s oil must be refined outside the state, traveling hundreds of miles south by ship or pipeline, then back north again for sale.

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Nevada has only one tiny refinery.

Hawaii’s problem is worse. The state has only two modest-sized refineries and virtually no oil reserves of its own. The closest large refineries are on the West Coast of the United States or in Asia. In an International Energy Agency (IEA) report about the state, analysts wrote:

Hawaii’s geographic isolation makes its energy infrastructure unique among the states. One-tenth of the state’s gross domestic product is spent on energy, most of that for imported crude oil and petroleum products. Over four-fifths of Hawaii’s energy comes from petroleum, making it the most petroleum-dependent state in the nation

At the current rate of increase in gas prices, Washington and Oregon will have $3 gas prices soon. Crude price is more important on total cost than the effects of taxes and refineries in almost all cases. West Texas Intermediate (WTI) crude sold for $47 in mid-March. The price is currently almost $60. If this trend continues for more than a few weeks, gas prices will be over $3 in an increasing number of states this summer.

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