Gas prices are falling. In fact, they’ve declined to lows not seen in months. Concerns of yet another global recession have caused oil prices to drop, and with them, gas prices. In the U.S., prices of regular unleaded gasoline have fallen more than 50 cents per gallon since May, when the cost hovered near $4.00. Still, gas prices vary widely between states – from $4.24 a gallon in Hawaii to $3.13 in Missouri, according to AAA. 24/7 Wall St. set out to find the states with the lowest gas prices and the possible reasons behind them.
Fuel has dropped by nearly a cent every day for the past four weeks, the New York Times reports. In some states, prices have fallen more than the national average, and in some regions, they have even fallen below $3.00 per gallon. Several factors affect gas prices depending on the state, but the main ones are gas taxes, the presence of nearby refineries, and what the people of the state can afford.
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The Tax Foundation reports that some states, including California and New York, have gas tax rates of nearly 50 cents per gallon. Other states, including South Carolina and Oklahoma, have a tax of less than 20 cents. while there are some exceptions, notably Indiana, most of the states with low gas tax rates also have low gas prices.
The presence of refineries within the state also appears to have a significant impact on gas prices. Texas, Oklahoma, and Louisiana are home to the vast majority of the nation’s fuel processing plants, and prices are notably lower in these states, possibly due to lower transportation costs. The exception to this rule is California, which has the second most refineries in the country, but also has one of the highest average gas prices of $3.82. This is likely due in part to its gas tax rate, which is the highest in the country.
The final factor affecting state and regional gas prices is how much people can afford to pay. There is a high correlation between states with low median household incomes and states with low gas prices. The prices residents can afford to pay, in turn, affects the state’s cost of living.
In order to identify the ten states with the lowest gas prices, 24/7 Wall St. used AAA’s Daily Fuel Gauge Report, which presents the most recent statewide average cost of regular gasoline. To find how many refineries each state has, we looked at the Energy Information Administration list of the major refineries in the U.S. We obtained median income data from the U.S. Census Bureau and state gas taxes The Tax Foundation. Finally, 24/7 Wall St. used the Missouri Department of Economic Development calculations to identify the cost of living in each state.
These are the ten states with the cheapest gas in the country.
10. Georgia> Price per gallon, regular: $3.25 (tied for 8th place)> Cost of living: 16th lowest> Median household income: $44,108 (12th lowest)> Tax per gallon: 20 cents (14th lowest)
Georgia’s current average gas price is just $3.25, same as Kentucky and Indiana. In July, the state’s prices were almost on par with the national average, but have since dropped faster than the national level. Georgia has one of the lowest relative costs of living in the country, as well as a median household income of just $44,108, the 12th lowest in the country.
9. Kentucky> Price per gallon, regular: $3.25 (tied for 8th place)> Cost of living: 6th lowest> Median household income: $41,236 (6th lowest)> Tax per gallon: 22 cents (20th lowest)
Kentucky has both the sixth lowest median household income in the country and the sixth lowest cost of living. Its gas prices are similarly low. While the state only has two refineries, this is more than the majority of states.
8. Indiana> Price per gallon, regular: $3.25 (tied for 8th place)> Cost of living: 7th lowest> Median household income: $46,322 (19th lowest)> Tax per gallon: 37 cents (8th highest)
According to the Missouri Department of Economic Development, Indiana has the seventh lowest relative cost of living in the country. Indiana has two refineries, including a BP plant in Whiting, which is the seventh largest in the country and the 19th largest in the world. According to The Indy Channel, the state’s current average gas price of $3.25 is a full dollar less than the Indiana all-time high of $4.25. The news source also reports that gas prices have declined in the state by more than 50 cents in the past month.
7. Oklahoma> Price per gallon, regular: $3.24> Cost of living: the lowest> Median household income: $43,400 (10th lowest)> Tax per gallon: 17 cents (5th lowest)
Oklahoma has the absolute lowest cost of living in the country. Gas prices are similarly low. They have been exceptionally low lately, dropping below $3.00 per gallon in some areas. Oklahoma has six instate oil refineries. This is an exceptional amount compared to other states, especially considering Oklahoma’s relatively small size.
6. Louisiana> Price per gallon, regular: $3.23> Cost of living: 17th lowest> Median household income: $39,443 (4th lowest)> Tax per gallon: 20 cents (tied for 13th lowest)
Its location on the Gulf of Mexico makes Louisiana an ideal location for refineries. With 17 plants, Louisiana has the third-most refineries in the country, and easily the most per square mile. The ExxonMobil plant in Baton Rouge is the second largest in the U.S. and the 10th largest in the world. Louisiana’s gas prices are also depressed by its economy. The state currently has the fourth lowest median income in the U.S.
5. Texas> Price per gallon, regular: $3.22> Cost of living: 2nd lowest> Median household income: $47,464 (23rd lowest)> Tax per gallon: 20 cents (tied for 13th lowest)
Like Louisiana, Texas’s location on the Gulf of Mexico makes it also an ideal location for refineries, of which it has the most in the country — 23. The state also has the second lowest cost of living, behind only Oklahoma. The state’s gas prices have consistently remained below the national average. Recently, Fort Worth has had the lowest prices in the state at $3.14 per gallon.
4. Tennessee> Price per gallon, regular: $3.20> Cost of living: 3rd lowest> Median household income: $38,686 (3rd lowest)> Tax per gallon: 21 cents (16th lowest)
Tennessee has the third lowest cost of living in the country, according to the Missouri Department of Economic Development. The state is also one of the poorest in the country, with a median income of just $38,686. Since peaking in May at $3.73, the state’s average gas price has dropped more than 50 cents.
3. Ohio> Price per gallon, regular: $3.18> Cost of living: 15th lowest> Median household income: $46,093 (16th lowest)> Tax per gallon: 28 cents (18th highest)
Ohio’s gas prices have not been significantly lower than the national average for most of the past year. In fact, during the spring, Ohio’s state average gas price was higher than the country’s. Since then, gas prices in the state have decreased dramatically. In many areas, prices have dropped below $3.00 per gallon.
2. South Carolina> Price per gallon, regular: $3.15> Cost of living: 22nd lowest> Median household income: $41,709 (8th lowest)> Tax per gallon: 16 cents (4th lowest)
South Carolina has among the lowest median household incomes in the country. The state also has the fourth lowest tax rate on gasoline in the country. Residents of the state have been paying the same rate — 16 cents a gallon — since 1987. There has been talk of raising the tax, but such a move is currently opposed by many, including Governor Nikki Haley.
1. Missouri> Price per gallon, regular: $3.13> Cost of living: 13th lowest> Median household income: $46,184 (17th lowest)> Tax per gallon: 18 cents (8th lowest)
Missouri has one of the lowest tax rates on gas in the country. The state’s proximity to gas-producing states also benefits Missouri residents when it comes to prices at the pump. According to Slate, this “reduces transportation costs” and “also makes Missouri less susceptible to price spikes when individual refineries run into problems.” In some areas of the state, such as Perryville, gas prices are as low as $2.77 per gallon.
Michael B. Sauter, Charles B. Stockdale