A gallon of regular gasoline costs $3.151 a gallon in Alaska, the state with the highest gasoline prices Thursday morning. In California a gallon of gas costs $3.106, and in Nevada the cost is $3.036.
While we might think that Alaska, one of the country’s largest producers of crude oil, would enjoy lower pricing, the reality is far different. According to a 2008 report from the state’s attorney general, it’s all about supply and demand:
[T]he market for gasoline in Alaska is structurally different than most other gasoline markets in the U.S. Gasoline demand in Alaska is small, and we do not enjoy the same degree of competition as most markets in the Lower-48. … Based on this market structure alone, it is unrealistic to expect that gasoline prices in Alaska should be the same as prices in other parts of the country.
Alaskans consume less than 300 million gallons of fuel annually, the least of any state, and the state charges the lowest total gasoline tax of any state, $0.3065 per gallon including the federal tax of $0.184 per gallon. The national average is $0.4888, according to the American Petroleum Institute (API).
California is another major producer of crude oil, and the state is always near the high-price end when any list of U.S. gasoline prices is put together. California gas taxes are among the highest in the country at $0.6075 per gallon. On top of that, clean air standards are higher in California than anywhere else in the country and that adds to the cost of refining the gasoline. The state has 17 operating refineries and can produce about 2 million barrels of refined products a day, according to the U.S. Energy Information Administration.
A fire at Exxon’s Torrance, Calif., refinery has kept that plant out of production for six months, and there is some concern that it may not restart this year. And with scheduled maintenance about to begin, the situation could get worse. The Orange County Register reported earlier this month that about 85,000 barrels a day of gasoline were out of production due to maintenance or other issues, but that number will rise to 280,000 barrels a day next month.
Nevada has just one small refinery and must import virtually its entire gasoline supply from either California or Utah. The majority comes from southern California, and even though Nevada does not have the same blending requirements, the state’s drivers are paying for California-grade gasoline. The state’s gasoline taxes total $0.5225 per gallon, about four cents above the national average. Essentially, as California prices go, so go prices in Nevada.
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