Why are gas prices going up? They're above $3 a gallon in these four states

Why are gas prices going up? They’re above $3 a gallon in these four states

By USA TODAY

The price of an average gallon of regular gasoline is surging nationwide, driven mostly by rising oil prices. Over the past month, the average is up almost 12 percent to $2.69. In four states, the price has increased to over $3 a gallon. This is just four months since American prices hit an 18 month low.

The average price of a gallon of regular is $3.61 in California, $3.38 in Hawaii, $3.14 in Washington and $3.04 in Oregon. It has nearly breached the $3 level in Nevada, where the price is $2.97, according to GasBuddy. Gas prices in several other states will only need to rise by pennies to join the group.

There are four primary reasons for the $3 prices. The cost of oil, the first reason, was just below $48 a barrel three months ago. Today it is at $61 a barrel, an increase of 27%. If the surge continues, American gas prices are likely to follow higher. Global oil supply has risen for several months, driven by an increase in crude produced from shale fields in the United States and Canada. This has been offset in the past several weeks by two things. The first is the effort by OPEC and Russia to constrain their production in an attempt to raise prices, and therefore their profits on oil. The other is sanctions set by the U.S. government against Venezuela and Iran for political reasons. The Iranian sanctions are due to disputes over its nuclear development plans. In Venezuela’s case, the issue is the nation’s repressive regime under President Nicolas Maduro. Venezuela has the largest proven oil reserves of any country.

The second reason for high oil prices is refinery capacity. Many refineries go offline in the spring for repairs and the retooling necessary to produce more gas for the summer. Refineries also can be shuttered due to infrastructure issues. Because of technical problems, two of the largest refineries are offline in California, which has contributed to a rapid rise in oil prices there.

Third, some states are farther than others from major refineries. Many of these refineries are along the Gulf of Mexico, south of Houston. None of the states with gas prices above $3 are near that area. Several of the states with the lowest gas prices are.

Fourth, state taxes keep gas prices permanently higher in some states compared to the national average. The states with gas prices over $3 are on the list of those with the highest gas taxes. According to the American Petroleum Institute, California has the second highest gas taxes among all states at $0.7276 a gallon. Washington is third at $0.6780, Hawaii has the fourth highest at $0.6478 and Oregon is 11th at $0.5517. The national average is $0.5218 a gallon.

Gasoline prices tend to lag oil prices. With oil up by nearly a third this year, and rising, the number of states with $3 per gallon gas is likely to grow.

Average regular gas price by state

State Price per gallon

Utah 2.393

Oklahoma 2.414

Arkansas 2.416

Alabama 2.418

Mississippi 2.423

Louisiana 2.435

South Carolina 2.436

Virginia 2.458

Wyoming 2.461

Kansas 2.463