There’s One State Where Filling Up Still Feels Like 2019

Gas prices are still low in Oklahoma, a lesson in why prices vary so much across America. The average price of a gallon of regular is $3.40 now, according to GasBuddy. By contrast, the state with the highest prices is California at $5.86, which is 72% higher than Oklahoma’s. Oklahoma is also close to where gas prices were a year ago, when supply was plentiful, and there was no war with Iran.

Oklahoma is close to the massive refineries along the Texas coast of the Gulf of Mexico, southeast of Houston, and some are closer to the city. Gas does not have to be transported far, which means transportation savings. Oklahoma also has large refineries of its own. And, it is a major oil-producing state on its own.

The key to low prices in the state is not one regularly realized. State gas taxes vary widely. The national average is about $.40 per gallon. In Oklahoma, it is $.20. In California, it is $.681. The federal gas tax is $.184 on top of these.

As oil prices rise, one option to give drivers relief is to cut these taxes at both the federal and local levels. In California, this would cut the price by nearly $1 a gallon. So far, there has been no move in that direction.

Most of the money from gas taxes goes toward repairing roads. The trade-off of lowering or eliminating these taxes is that they provide Americans with immediate financial relief at the pump. That helps the economy immediately. Better roads do not.

The average American household spends about $2,500 a year on gas. The current surge in oil prices adds about another $1,000. Households do not have a ready way to get that additional money. That, in turn, cuts money for consumer spending. Consumer spending is about 68% of GDP. The argument that extremely high oil prices drive the economy toward recession is not hard to make

States cannot be moved closer to refineries. That leaves the gas tax as the sole significant way to drop the price of gas nationwide closer to where it is in Oklahoma.