The chart below shows the Nationwide average price of gasoline over the last year (12 months) compared to the gas price in Dallas and the price in Los Angeles. You can change the time period to see anywhere from 1 month to 6 years. Simply select the time period you wish to see from the list at the top. You can also choose different cities and time periods from the customization box below the chart.

The following table compares the current average gas price statewide between New York, California and Texas. As of this writing, the result is as you would expect… Texas gas prices are lower than New York and much lower than California.

At first glance, you might think that it is purely a function of the proximity of oil wells. After all, Texas is known for its oil wells. However, after a bit of reflection you might think refinery location would actually be more important. After all, if oil has to be shipped long distances to a refinery and then the gas has to be shipped back, it isn’t going to help the local price of gas.

GasYes, Texas has 28 refineries, but California has 17 refineries, and New York doesn’t have any. Although New Jersey has 6 (although 3 of them have been closed) and Pennsylvania has 6 more that are operating.  Therefore distance to refineries is not a significant factor for any of the three states we are looking at. For more information see Complete List of U.S. Oil Refineries.

Plus, when we look at the list of Oil Refineries in the U.S. neither North or South Carolina have any refineries. And as we can see on the Gas Price Chart South Carolina has significantly lower gasoline prices than North Carolina and even adjacent counties across state lines have significant price differences.

So why would prices differ so drastically across state lines?

Obviously, the key factor in gas prices is not the distance to a refinery…

But some arbitrary line on a map. Hmmm, could it be related more to governments than to oil companies?

When we look closely we see that the amount of state sales and highway taxes included in the price of gasoline varies greatly and is the key factor to the price differential.  According to the American Petroleum Institute : (as of 1/15/16) (follow the link to API for the most current rates).

StateState TaxesFederal Excise TaxTotal Taxes per Gallon
Texas 20¢/gal.18.40¢/gal.38.40¢/gal.
New York 42.64¢/gal.18.40¢/gal.61.04¢/gal.
California 40.62¢/gal.18.40¢/gal.59.02¢/gal.

And if we we look at the differences in taxes between North and South Carolina we see:

StateState TaxesFederal Excise TaxTotal Taxes per Gallon
North Carolina 35.25¢/gal.18.40¢/gal.53.65¢/gal.
South Carolina 16.75¢/gal.18.40¢/gal.35.15¢/gal.

So it is obvious why people from North Carolina drive across the state line to get gas (to save 18.5¢/gal. in taxes).

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