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5 States With Cheap Gas

By Aimee Duffy - Apr 12, 2013 at 8:38AM

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When gas prices are high, some Americans have it easier than others based solely on the states they live in.

It seems lately that many Americans find themselves driving an extra mile or two in order to fill up at "the cheap gas station". The other side of town doesn't seem so far when gas is hovering around or above the $4.00 mark. For some lucky Americans, though, gas is nowhere near that expensive right now. It all comes down to where you live, so today we're taking a look at the five states with the cheapest gas, and what the future may hold for drivers there.

Gas on the cheap
The states with the cheapest gas are located in the South or out West. Wyoming is on top of the list with regular grade gasoline averaging $3.35 per gallon earlier this month. Here's a look at the five states with the cheapest gasoline:

Rank

State

Regular Gas

1

Wyoming

$3.35

2

South Carolina

$3.36

3

Montana

$3.37

4

Tennessee

$3.38

5

Arkansas

$3.39

Source: AAA 

Wyoming has the second-lowest gasoline taxes in the U.S., after Alaska, which contributes to its (relatively) dirt cheap gas prices. (For those keeping score at home, the state also has the country's second-lowest electricity prices.)

Wyoming does plan to raise its taxes by $0.10 this summer, as it deals with the same thing many state governments are contending with today: shrinking transportation infrastructure budgets and growing maintenance costs.

Other factors beside taxes that contribute to low gasoline prices include the operations of refineries in a particular market. For example, HollyFrontier (HFC) owns one refinery in Wyoming. If it goes down for an unforeseen reason, or planned maintenance takes longer than expected, it will impact gasoline prices in that region. 

Wyoming refineries have received more citations over the past five years than any other state's operations, so this is a legitimate concern. 

The future of gas prices
Wyoming hasn't increased its stake in gasoline taxes in 15 years. In fact, there isn't a state in our top five that has increased gasoline taxes more recently than 12 years ago, and South Carolina and Tennessee have left their taxes untouched for 24 straight. It is likely that, given the current problems with America's highway maintenance, even these five states committed to keeping gasoline taxes low will have to increase them at some point.

It is also worth pointing out that refiners who export gasoline can receive higher prices for it abroad, which props up domestic prices. Until that dynamic shifts, companies like Valero (VLO 0.38%) -- which is responsible for more than 20% of petroleum products exported from the U.S. -- will continue to send their gasoline elsewhere.

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Valero Energy Corporation Stock Quote
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