Top 10 States with the Cheapest Gas

Concerns about global economic weakness have pushed crude oil prices down in recent weeks. The decline was seen in gas prices, too. As of December 6, national prices averaged $3.38 per gallon, down from $3.46 per gallon a month before. Some states have kept their prices significantly below the average nationwide price. Based on data from The American Automobile Association, 24/7 Wall St. reviewed the 10 states with the lowest gas prices.

States impose gasoline taxes and fees, in addition to federal gasoline taxes. These taxes can vary significantly from state to state, affecting regional prices. It’s not surprising then to find that the ten states with the lowest gas prices tend to have among the lowest fuel taxes. The states on this list are below the median in terms of taxes and fees, with four of the states on this list among the 10 states with the lowest taxes and fees per gallon.

States with refineries also tend to have lower prices because oil can be moved to local stations at much cheaper prices, which results in lower prices at the pump. Most of the states on this list have refineries located within its borders. Texas, which has among the cheapest gas in the country, has 26 refineries, more than any other state in the country. Louisiana has 18 refineries, the second most of any state.

Overall cost of living is generally low in the states with the lowest gas prices. Tennessee, which has the fourth-cheapest gas prices, has the lowest cost of living in the country. Oklahoma, which has the fifth-cheapest gas, has the second-lowest cost of living. Overall, all the states on this list are in the lower half in terms of cost of living. And five of the 10 states on the list have among the 10-lowest cost of living. Concerns about global economic weakness have pushed crude oil prices down in recent weeks. The decline was seen in gas prices, too. As of December 6, national prices averaged $3.38 per gallon, down from $3.46 per gallon a month before. Some states have kept their prices significantly below the average nationwide price. Based on data from The American Automobile Association, 24/7 Wall St. reviewed the 10 states with the lowest gas prices.

But while cost of living is low, so is the amount of money state residents bring in. All of the states on the list had median household income in 2011 below the national median income of $50,502. Seven of the 10 states had among the 10 lowest median incomes in the country.

Based on AAA’s Daily Fuel Gauge Report, 24/7 Wall St. reviewed the 10 states with the lowest gas prices as of December 6. We also looked at gas prices from the same time last week, last month and last year, as well as peak prices this year, to monitor the recent activity of gas prices in different parts of the country. We also considered taxes and fees per gallon by state from the American Petroleum Institute, refineries and refining capacity by state from the U.S. Energy Information Administration, cost of living by state from the Council for Community and Economic Research and 2011 median household income from the U.S. Census Bureau.

These are the 10 states with the lowest gas prices.

10. Kansas > Regular gas price per gallon: $3.22 > Tax per gallon: 25.0 cents (25th lowest) > Number of operating refineries: 3

A gallon of gas in Kansas currently costs 16 cents less than the national average, roughly the same price difference as a year ago. But, like the most of the country, gas prices in the state have risen year-over-year, with gas now 10 cents more expensive than it was this time last year. The highest recorded average gas price in Kansas was $4.02 per gallon in July 2008, while the highest price this year was $3.80 at the start of September.

9. Alabama > Regular gas price per gallon: $3.21 > Tax per gallon: 20.9 cents (13th lowest) > Number of operating refineries: 3

The highest gas price in Alabama of $4.05 per gallon was recorded in September, 2008. More recently, gas prices peaked at roughly $3.75 per gallon in April of this year. Prices have since fallen by more than 50 cents to the current price of $3.21 a gallon. While the state does not have particularly strong refining — it processes 180,000 barrels per day, 18th in the country — Alabama is located in the gulf coast region, home to the two biggest refiners in the country, Texas and Louisiana.

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8. Louisiana > Regular gas price per gallon: $3.19 > Tax per gallon: 20.0 cents (tied for 11th lowest) > Number of operating refineries: 18

Louisiana’s gas price of $3.19 a gallon is down 11 cents from a month earlier, and way below the nearly $3.80 a gallon reached in early April. In many of Louisiana’s larger metropolitan areas, prices are even lower. In New Orleans, the average price of gasoline is $3.16 a gallon. In the Shreveport-Bossier City area, the average price is just $3.13. Helping to keep prices low are Louisiana’s 18 refineries, which is more than any other state except for Texas. The state also has a refining capacity of over 3 million barrels per day, second-highest in the U.S.

7. Mississippi > Regular gas price per gallon: $3.17 > Tax per gallon: 18.8 cents (17th lowest) > Number of operating refineries: 3

Current gas prices in Mississippi are $3.17 per gallon, down 9 cents from a month ago — a larger decline than the 8 cents drop nationwide and well below the $3.75 per gallon – $3.80 per gallon recorded in early April. But while gas prices in Mississippi are lower than most states in the country, Mississippi’s residents are hurting more than most. The state’s median household income in 2011 was a nationwide-low $36,919, while the unemployment rate of 8.9% in October of this year was a percentage point higher than the national unemployment rate.

6. Arkansas > Regular gas price per gallon: $3.16 > Tax per gallon: 21.8 cents (16th lowest) > Number of operating refineries: 2

Arkansas does not have an especially large refining capacity. With just two refineries, its capacity is under 100,000 barrels per day and lower than half of all states. Still, the state benefits from its proximity to Texas and Louisiana, the two states with the highest refining capacity in the country. As of the second quarter of this year, Arkansas had one of the country’s lowest costs of living. This is partly due to the state having the fifth-lowest cost of transportation, which is largely determined by the price of gas.

To see the full list of the states with the cheapest gas, please visit 24/7 Wall St.