The recent drop in the average price of a gallon of regular gas to just above $3, with more than half of U.S. states experiencing prices below that level, does not necessarily indicate a harbinger of future prices across the entire U.S. The fluctuations in gas prices are primarily influenced by oil prices, and while recent shipping problems near the Suez Canal have increased oil prices by $2 in the last few days, other factors also contribute to regional variations.
California stands out with average gas prices around $4.50, and in cities like San Francisco, prices exceeding $4.60. Several factors contribute to California’s consistently higher gas prices:
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- Gas Taxes and Levies: California imposes the highest gas taxes and levies in the country, currently at $0.8655 per gallon, compared to the national average of $0.5709. Alaska has the lowest at $0.3353.
- Stringent Gas Specifications: California has specific requirements for gasoline, and a declining number of refineries are capable of producing to these specifications. This limitation in supply contributes to higher prices.
- Distance from Crude Oil Sources: California is geographically distant from major crude oil sources, particularly those in the Gulf of Mexico. About 20% of crude oil production and 45% of U.S. refinery capacity are located in the Gulf Coast.
Given these factors, gas prices are likely to remain considerably higher in California compared to the rest of the country. While the recent drop in the national average is influenced by various factors, regional disparities persist due to state-specific conditions and regulations.
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