Why California Gas Prices Are 50% Higher Than National Average

By Douglas A. McIntyre Updated Jan 6, 1:47AM EST · Published Oct 23, 12:38PM EDT

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Why California Gas Prices Are 50% Higher Than National Average — © BraunS / Getty Images

U.S. gasoline prices have not moved much in the past month. At $2.63, the average price of a gallon of regular nationwide is four cents lower than a month ago. By state, the story is entirely different. States close to the Gulf of Mexico’s oil fields and the huge refineries south of Houston tend to have gas prices below the national average. States further away and with few refineries have gas prices that can be 75% or more higher.

The price of a gallon of regular in California today is $4.11, according to GasBuddy. In some large cities, it is closer to $4.20. Hawaii is a distant second at $3.64 a gallon. Most of its oil supply is shipped, at considerable cost, from Asia or the West Coast. The cost of refueling in these states may prompt some drivers to consider America’s most eco-friendly vehicles.

In Louisiana, the price for a gallon of regular is $2.24. Not coincidentally, the price is below $2.30 in Oklahoma, Arkansas, Mississippi, Alabama, Texas and South Carolina. Though South Carolina is not near the Gulf, it has a great deal of its own refinery capacity.

Refinery access and oil prices are not the only major contributor to gas price levels. State gas taxes can play a substantial role. As of October 1, the tax on a gallon of gas in California as $0.8045, according to the American Petroleum Institute. This is the highest among all states. The national average is $0.5470 per gallon. Most of the Gulf states have gas taxes below $0.40 a gallon. Missouri is the second-lowest of all states at $0.3582. Mississippi’s is $0.3719, Oklahoma’s is $0.3840, while Louisiana’s is $0.3841.

Despite huge differences among the states, gas prices, in general, have not moved much recently because of oil prices. Crude has not traded much outside a range of $52 to $55 a barrel. The spike caused by the attacks on oil tankers in the Strait of Hormuz ended in August. Supply from OPEC and the shale-rich fields in the United States have not changed much. While the global economy may have slowed, demand has not wavered much either.

Based on the gas tax, refinery and transportation costs issues, the divide between California and the Gulf states almost certainly won’t change. Check out what a gallon of gas cost the year you were born.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.