Does Your State Have the Most Expensive Gasoline in America?

Growing up, there was always one gas station in town my family avoided at all costs. That station had the highest prices, of course, and was only for the foolish or desperate. It made more sense -- and saved more cents -- to travel an extra mile or so to the cheaper station. But some Americans are simply out of luck when it comes to tracking down cheap gas. Today we'll take a look at the states where it costs the most to fill up, and why relief may be nowhere in sight.

Pain at the pump
These days, if you are fortunate enough to live in a tropical paradise, you are also unfortunate enough to pay the highest average price for gasoline in the country. Hawaii is first on the list of the five states with the most expensive gas:

Rank

State

Regular Gasoline 

1

Hawaii

$4.39

2

California

$4.02

3

Alaska

$4.01

4

District of Columbia

$3.90

5

New York

$3.85

Source: AAA 

Hawaii only has two operating oil refineries. Tesoro (NYSE: TSO  ) plans to close the one it owns, Chevron (NYSE: CVX  ) owns the other, and the cost of shipping crude oil out there is the main reason that gas is so expensive. California is ranked second largely because it has the highest taxes on gas in the country. The combined local, state, and federal taxes tack on just shy of $0.69 per gallon, according to the American Petroleum Institute.

What's in a gas price?
Historically, there has always been more to gas prices than the price of oil. Federal, state, and local taxes, as well as the fees slapped on as gasoline changes hands before it hits your tank, all contribute to the price of gasoline.

The first gasoline tax began in 1919, and 10 years later every state in the union had imposed its own fee on gasoline sales. The revenue collected was used to build out roads and highway infrastructure. In 1929, the taxes brought in $431.4 million, allowing close to half of all states to eliminate property taxes as a source of highway funding.

Flash forward to today
Relying on gas tax revenue to maintain our transportation infrastructure is a tricky business. Today, American roads are in desperate need of repair, but because gas is expensive many of us are driving less. Those that still head out on the highway are increasingly using less gasoline because they are driving more fuel-efficient vehicles.

As a result, many states are making plans to increase taxes on gasoline. Last week, The Wall Street Journal reported that 17 states are considering or have already enacted tax hikes to give their transportation budgets a boost. As further evidence that these are desperate times for infrastructure budgets, 18 states haven't enacted a gas tax increase in 20 years or more.

It may well be that high gas prices are here to stay.

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  • Report this Comment On April 12, 2013, at 9:42 AM, Duane1957 wrote:

    "Hawaii only has two operating oil refineries. Tesoro (NYSE: TSO ) plans to close the one it owns, Chevron (NYSE: CVX ) owns the other, and the cost of shipping crude oil out there is the main reason that gas is so expensive."

    I don't think it is the cost of shipping the oil as HA is actually closer to the oil sources than CA - but the refineries are not complex and can only process light (expensive) crude oil hence their cost to produce gasoline is on the high side I would expect. Sales price as we all know should reflect the highest cost tier of supply required to meet demand.

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