Marketplace Logo Donate

Daily business news and economic stories from Marketplace

How where you live impacts how much you pay at the pump

Heard on:
Gas prices over $4.00 a gallon are displayed on a pump at a gas station on May 24, 2019 in Mill Valley, California.

Gas prices at the pump vary from state to state. Why is that? Justin Sullivan/Getty Images

get the podcast

The national average for a gallon of unleaded is just about four bucks – $3.99 according to AAA, to be exact. But the range of what folks are paying varies widely depending on where you are. Gas is $5.39 in Hawaii and $3.49 in Texas. How come?

It’s not exactly the same as the three most important things about real estate, but it turns out location matters a lot when it comes to how much you’re paying to fill up your gasoline tank.

“The two big things right now that are driving the differences in price that you see regionally, have a lot to do with differences in state taxes, and also the transportation component,” said Hugh Daigle, an associate professor at the University of Texas who teaches petroleum and geosystems engineering.

The transportation component Daigle is talking about is the cost involved in getting the gas from where it’s produced to where you buy it.

On the Gulf Coast, refineries are relatively close to population centers — think Houston and New Orleans. But on the West Coast, refineries are more isolated and there’s less pipeline infrastructure. Which means higher gas prices aren’t just a California thing.

“Yeah even Oregon, Washington State, you’re still going to be subject to those transportation costs,” Daigle said.

Now, that’s the supply side of things. Akshay Rao at the University of Minnesota said there’s a demand element here, too. 

“People buy gasoline, not because they like gasoline, right? Nobody goes window shopping for gasoline, it’s a means to an end, it provides the benefit. And the benefit is getting from point A to point B in a particular fashion,” Rao said.

Rao said it’s not just about getting there, it’s getting there in the way that fits your lifestyle- whether that’s a family taking kids to soccer practice in a minivan, or a contractor delivering lumber in their pickup, neither are necessarily the most fuel efficient vehicles out there.

What's Next

Latest Episodes From Our Shows

Listen
4:50 PM PDT
17:36
Listen
4:27 PM PDT
25:43
Listen
1:47 PM PDT
1:50
Listen
7:58 AM PDT
7:32
Listen
2:36 AM PDT
4:41
Listen
Sep 29, 2022
2:55
Listen
Aug 9, 2022
24:46
Exit mobile version