Eight States Where Gasoline is Expected to Drop Below $2.00 a Gallon

Gas Prices Continue To Rise In California

As the price of oil continues to fall, in large part due to the fracking boom, consumers in some states may see gas below $2.00 per gallon.

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Via 24/7:

Experts have already begun to mention the chance that the average price for a gallon of regular gas will drop below $2 in some parts of America. There are several states where this is highly likely. As a matter of fact, the prices in these states could drop below $2 as early are the start of next year

Most of the states likely to post sub- $2 gas have three things in common. These are the general drop in oil prices, proximity to large refineries, and low state gas taxes.


The first among these has already begun to have an out-sized influence. Oil has fallen below $66. Just five days ago, the price was nearly $80. In late June, it was close to $100. If oil stays below $70, it could knock $.20 to $.30 off the average price of a regular gallon of gas nationwide by itself, if the evidence of the last month as an indication. Over that period, the price of gas nationwide has dropped from $3.03 to $2.79, according to Gasbuddy.

The eight states were gas prices are likely to fall below $2 are Mississippi, Alabama, Louisiana, Texas, Oklahoma, South Carolina, Missouri, and Tennessee.

Several of these are either on the Gulf of Mexico or states adjacent to ones that are. Each already has gas prices below $2.60. In all but one, the price has continued to fall over the last several days.

Mississippi, Alabama, Texas, and Louisiana are directly on the Gulf of Mexico and close to the large refineries in Texas, which, taken together, are among the biggest block of refineries in the world. Oklahoma and Tennessee border at least one of these four states. So, each has the advantage that among the variable costs of gasoline is the distance it must travel from refineries to retailers.

While you enjoy these lower fuel costs don’t forget why gas has become so expensive in the first place — Gas is expensive because of state and federal taxes.

A big percentage of the cost of gasoline goes to state and federal taxes, in fact the government makes FAR more in “profit” on gasoline, than the oil companies themselves!

The federal excise tax is 18.4 cents per gallon, each state sets it’s own tax rate, and they vary greatly around the country.

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According to the IJ Review the two states who have the highest taxes are, you guessed it, New York at $0.505 and California at $0.4978. The two states with the lowest tax rates are: Alaska at $0.124 and New Jersey at $0.145.


Expressed as a percentage the price for a gallon of gas breaks down like this:

Crude Oil: 67%.
Refining Costs and Profits: 12%
Distribution, Marketing, and Retail Costs and Profits: 9%
Taxes: 12%. Federal excise taxes were 18.4 cents per gallon and state excise taxes average 23.52 cents per gallon.

The National Review reports that Exxon profits have averaged 8.26% for the past 20 quarters so government makes almost 50% more in “profit” from gasoline than the oil company’s themselves!

Has the price of gas fallen significantly in your state?



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