Aug. 6, 2012 at 8:11 AM ET
Did your recent trip to the gas station feel like it took a higher toll than normal on your wallet? It probably wasn’t your imagination. Average gasoline prices in the United States increased by 5.1 percent, or 17 cents a gallon, during July, according to the AAA July 2012 Monthly Gas Price Report. This was the first monthly increase since March. It was also the highest increase in prices for the month of July since at least 2000 -- the first year AAA began recording prices.
“Higher global oil prices and increased demand for gasoline during the busy summer driving season were the primary factors that sent pump prices higher in July,” AAA spokesman Avery Ash said in a statement. AAA went on to note than an increase in gas prices was due to “rising crude and ethanol prices, geopolitical concerns in the Middle East and mixed economic news surrounding the global economy.”
The price of gas has been rising across the country, but it varies vastly from state to state. Different factors play a role in determining a state’s average gas price, including taxes, production in the state and transportation costs. Based on the AAA report, 24/7 Wall St. identified the 11 states with the highest gas prices as of July 31.
In June, 24/7 Wall St. identified the 10 states with the lowest gas prices -- four of them were located on the Gulf Coast. Production of West Texas Intermediate (WTI) oil, an increasingly cheaper form of crude oil, takes place primarily in the Gulf Coast region. None of the states on this list, however, are located in that region -- most of them are in the northern U.S., the Northeast or outside the continental U.S., equating to high transportation costs for shipping oil.
Furthermore, states with the highest gas prices tend to have the highest gas taxes. Eight of the 11 states on this list were ranked in the top 10 in terms of gas taxes, which includes state excise taxes along with other state taxes and fees. While the average state tax in the U.S. is 30.5 cents a gallon, four of the states on this list cracked 40 cents a gallon. The notable outlier was Alaska, which despite coming in second for this list, charges only 8 cents a gallon in taxes. That is lower than any other state on this list.
In compiling a list of the states with the highest gas prices, 24/7 Wall St. referred to daily data on gas prices provided by AAA. Besides the current gas prices, we looked at prices from a day ago, a week ago, a month ago and a year ago, along with the percentage change between now and a year ago. We considered current gas taxes with information provided by the American Petroleum Institute. We factored in the role of oil production by state as of the beginning of 2012, as measured by the Energy Information Administration. To get a sense of how gas prices lined up with other costs, we looked at a cost-of-living index provided by the Council for Community and Economic Research. Finally, we looked at the June unemployment rate provided by the Bureau of Labor Statistics as one way to gauge how well a state can handle its gas prices.
These are the 11 states with the highest gas prices.
As of the end of July, Hawaii had the highest gas prices in the country. This is nothing new for Hawaiians, who paid the highest price nationwide last week, last month and last year. Residents also pay 48.3 cents per gallon in state taxes, the third-highest rate in the country. The relative cost of living in Hawaii is the highest in the nation, as are transportation and utilities costs. Since the end of July 2011, Hawaii is the only state in the U.S. that has seen a net increase in price. There has been some relief recently; though gas prices rose across the country in the past month, prices fell 12 cents per gallon in Hawaii.
Just because oil production is a major industry in Alaska and the state has the lowest taxes per gallon of gas, that does not mean filling up the tank is cheap. Alaska still manages to have the second-highest gas prices in the U.S. and is only one of two states to crack $4 a gallon for regular. The state has the second-highest cost of living after Hawaii, certainly supported by the high gas price. The cost of utilities is the second highest behind Hawaii, and the cost of transportation is third highest behind Hawaii and Connecticut.
Connecticut has the highest gas prices in the continental U.S., as well as the second-highest transportation costs in the country -- behind only Hawaii. Furthermore, not only does Connecticut not have any refineries, but not one state in New England had an operating refinery as of the beginning of this year. Additionally, residents pay the third-highest gas tax rates in the country -- 45 cents split between a 25-cent excise tax and 20 cents in other taxes.
Gasoline prices in California, as in New York, can be partially explained by high taxes. Californians pay as much in state taxes as New Yorkers, and more than residents of any of the other 48 states. The state’s excise tax rate, 36 cents per gallon, is the third highest in the nation. These taxes likely help offset any price benefits consumers might receive from having 16 operating refineries in the state, processing 1.96 million barrels of oil a day. Though the price of gas in the state has risen about 1.25 percent in the past month, this is a smaller increase than in all but 13 other states.
5. New York
Even more than in Illinois, New York’s gas prices are due to high gas taxes. While the state only levies an 8.1-cent excise tax, another 41.3 cents is tacked on in other state taxes and fees, a higher charge than in any other state. Meanwhile, New York has the third-highest cost of living out of all 50 states. Taxes, the high cost of living and the fact that New York has no oil refineries means that drivers can expect to pay a hefty price at the pump. It does not help that many New Yorkers are without work. The state’s 8.9 percent unemployment rate, up from 8.2 percent in June 2011, rose more in the past year than any other state in the country. It is the only state on this list to see a higher percentage of people unemployed now than a year ago.
While the Illinois excise tax of 19 cents is below the U.S. average of 21 cents, the state charges an additional 20.7 cents in other state taxes and fees. That is the fifth highest of all states and higher than all but two states on this list. Meanwhile, prices at the pump sting a little more since the unemployment rate in Illinois is 8.7 percent as of June, topping the national average of 8.2 percent. If you live in Illinois and are near a state line, you might consider a drive across the border. Gas prices average $3.33 in Missouri, $3.47 in Kentucky and $3.57 in Indiana.
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