In this article, we are going to discuss the 15 states with the most expensive gas in the US. You can skip our detailed analysis of the global oil and gas market, the reason why gas is so cheap in the U.S., the recent uptick in gas prices this summer, the transition to biorefineries, and the role of artificial intelligence in the oil and gas industry, and go directly to 5 States With the Most Expensive Gas in the US.
America is the world’s leading producer of oil, accounting for 14.7% of the overall world crude production in 2022. Having the luxury of local production means that oil and gas are readily accessible and affordable for mass distribution. While this may not seem like it directly impacts the average oil and gas consumer, the truth is that it does in a massive way. Every year, the indigenous production of oil and gas helps save American consumers an estimated $203 billion, or $2,500 for each family of four. Moreover, the oil and gas industry also supports over 12 million American jobs, provides billions of dollars in tax revenue, and ensures energy security.
Global Oil and Gas Market:
As we mentioned in our article – 20 Countries with the Cheapest Gas Prices – the global oil and gas market was valued at $6.99 trillion in 2022, and is expected to grow to $8.67 trillion in 2027, with a CAGR of 4.4% during the forecast period. The largest region in the global oil and gas market share is Asia Pacific, with North America coming in second.
The primary factors driving the growth of the industry include the rising demand for oil and gas, growing competition in the industry, financial capital, and public scrutiny. Furthermore, the rising oil and gas exploration activities and the increase in prices globally are also anticipated to drive the industry's growth.
Why Gas is so Cheap in the U.S.:
As a general rule, richer countries have higher gas prices, while the prices in poorer countries or countries that produce and export oil are significantly lower. However, the U.S. is an exception to this rule and has surprisingly low gas prices, despite being among the Richest Countries in the World. The principal reason for this is that gas taxes have always been exceptionally low in America. The federal gas tax was first charged in 1932 at 1 cent per gallon and is now at 18.4 cents a gallon, but this tax has remained unchanged since 1993.
As of November 4th 2023, the average price of gas in the United States stands at $3.426 per gallon. Because of the large number of refineries present, Texas is the state with the cheapest gas, at only $2.9 per gallon.
Recent Uptick in Gas Prices:
Gas prices shot up this summer in the U.S. and the heatwave that plagued large parts of the country had something to do with it. The problem is that refineries, like humans, can’t handle persistently sweltering temperatures. When temperatures soar to over 100 degrees Fahrenheit, these complex facilities can’t churn out all the gasoline to keep up with the growing demand, thus causing outages and supply issues. Texas, where most of the country’s refineries are located, faced its most extreme summer this year. Ironically, this demonstrated that not even the oil and gas sector – an industry that scientists blame in part for global warming – is immune from the consequences of the climate crisis.
Transition to Biorefineries:
Biorefineries are processing facilities that convert biomass into energy and value-added products, like biofuels, biochemicals etc. The increasing pressure to decarbonize has incentivized several oil refineries to repurpose their refiners to ‘stand-alone biorefineries’, that produce lower carbon intensive biofuels.
A great example of this is Shell plc (NYSE:SHEL)’s plan to transform its former Convent refinery in Louisiana into a renewable fuels and lower carbon products complex. The oil giant announced last year that it would build a $1.48 billion low-carbon fuels facility at the site after it shut down the refinery in 2021, as part of its efforts to reduce carbon emissions. It is estimated that construction would start in February 2025 and finish by March 2028.
The plan to repurpose Convent is the first in a series of projects Shell plc (NYSE:SHEL) is considering at its facilities along the Gulf Coast to accelerate the transition from fossil fuels. The regional spending plan, which is still in flux, could cost as much as $10 billion.
Artificial Intelligence in the Oil and Gas Industry:
Major players in the oil and gas sector are looking into big data analytics and AI to enhance decision making abilities and thus profits. AI will allow these companies to make better drilling and operational decisions, assist them in overcoming their challenges, and position them for long-term success.
Among the companies that have prominently adopted a digital mindset in this industry is The Exxon Mobil Corporation (NYSE:XOM). The Texas-based oil major has collaborated with IBM’s Data Science and AI Elite Team and seismic experts to use AI to interpret and integrate data from siloed systems into one repository, which is hosted on a multi-cloud environment. From Internet of Things (IoT) projects that make its refineries more efficient, to state-of-the art digital tools that help support production and detect methane emissions from its operations, The Exxon Mobil Corporation (NYSE:XOM) is leveraging its global scale to turn data into unique insights that drive improved reliability and performance.
The company is also enhancing its customers’ experience at the pump by offering mobile apps for payment options, customer loyalty programs, and comprehensive car maintenance experiences. In fact, the Exxon Mobil Corporation (NYSE:XOM) is one of the Most Innovative Companies in the World in 2023.
With that said, here are the States that Have the Most Expensive Gas Prices.
15 States With the Most Expensive Gas in the US
Methodology:
To collect data for this article, we have referred to AAA, looking for the states with the highest gas prices. We have also referred to the Energy Information Administration to collect information about the crude oil and gas reserves in several states. The following states have been ranked by their gas prices as of November 4th 2023.
According to the University of Wyoming, gas prices tend to be high in Equality State because there are fewer gas stations in most areas competing against one another, and so with less intense competition there is less incentive to undercut your competitors and begin a price war.
Wyoming was the eighth-largest crude oil-producing state in the nation in 2022, accounting for 2% of U.S. total crude oil output.
14. Vermont
Price of Gas per Gallon: $3.606
The average gas price in Vermont has fallen by almost 5% since last month, when it stood at $3.796. The Green Mountain State has no crude oil reserves or production, nor does it have any petroleum refineries. Although there are no petroleum product pipelines in the state, there is a petroleum product terminal in the Burlington area.
In 2012, Vermont’s governor signed a bill making it the first U.S. state to ban fracking, the controversial practice to extract natural gas from the ground.
Vermont is counted among states with the most expensive gas.
13. District of Columbia
Price of Gas per Gallon: $3.623
The District of Columbia has no crude oil reserves or refineries, and consumes less total petroleum and has lower petroleum use per capita than any state. The Colonial Pipeline and PPL Pipeline transport petroleum products from Gulf Coast refineries to nearby terminals in northern Virginia and Maryland. The petroleum products are then transported by trucks into the District.
In December 2017, Washington D.C. passed the strongest climate policy in the country. The Clean Energy DC Omnibus Amendment Act of 2018, or ‘Clean Energy DC Act’, is a climate solution that will result in less pollution, more investment into energy efficiency solutions, and a faster transition to clean, renewable energy sources.
12. Montana
Price of Gas per Gallon: $3.638
Most of Montana's crude oil production comes from the Bakken Formation in the northeastern corner of the state, however, the majority of the oil produced is exported to other states. The Treasure State also has four refineries with a combined crude oil processing capacity of about 218,000 barrels per calendar day. In Montana, gasoline is taxed at a rate of 33 cents per gallon, tied as the 14th highest among states.
Montana is a small market, so the refineries don't have any competition even amongst each other and can jack up prices on local retailers. Transportation is another big factor that contributes to the high cost of gas, as everything is a little more spread out in Montana.
Montana is counted among states with the highest gas pricesin America.
11. Utah
Price of Gas per Gallon: $3.658
Utah produces a significant amount of crude oil, primarily from the Uintah Basin in the eastern part of the state. The Beehive State has the fourth-highest number of oil and natural gas leases on federal lands, after Wyoming, New Mexico, and Colorado.
While current Utah gas prices are down dramatically from the state’s all-time high of $5.26 per gallon reached last July, experts say that supply side problems are skewing the market, causing a rise in prices.
10. Pennsylvania
Price of Gas per Gallon: $3.665
It's no secret that gas prices are surprisingly high in Pennsylvania, especially when five of the six neighboring states have cheaper gas. This is primarily because of the state's gas tax, which currently stands at $0.576 per gallon.
In January, Pennsylvania's State Senate passed a bill to cut the state's gas tax, one of the nation's highest. Senate Bill 35, which was approved by the Transportation Committee, would stop the automatic gas tax increase for 2023 and permanently set the wholesale price of gasoline at $2.99 per gallon. The Transportation Committee also passed a bill that dedicates gas tax revenues to road and bridge safety projects.
Pennsylvania ranks among the Top 10 states with the highest gas prices.
9. New York
Price of Gas per Gallon: $3.713
Since the drilling of the first commercial oil well in 1865, more than 75,000 wells have been drilled in the Empire State – about 14,000 of these are still active and extraction of oil and gas contributes half a billion dollars annually to the state’s economy. Still, New York produces a small amount of natural gas and crude oil, and as a result, is dependent on energy supplies from out of state to meet about three-fourths of its energy needs.
Fuel prices are generally higher in New York because of the state's tax structure, and without a local refinery, delivery costs are also higher.
8. Idaho
Price of Gas per Gallon: $3.844
Exploration for crude oil in Idaho began in 1903, but despite promising geology in the state's southeast and southwest, no commercial reserves were discovered or produced until the last decade. New production of oil, natural gas, and liquid condensate in the Payette Basin caused Idaho to become the 31st state in the country to produce hydrocarbons.
Although gas prices have fallen by over 6.9% in the Gem State since a month ago, when they stood at $4.13, it still sits among states with the highest price of gas.
7. Arizona
Price of Gas per Gallon: $3.875
Arizona has no significant proved crude oil reserves, and the state's few oil wells produced only about 6,000 barrels of crude oil in 2022. There are no oil refineries in the Grand Canyon State, so almost all of its gasoline is imported from California, via the ‘West Line’, and Texas, via the ‘East Line’.
Arizona State requires a particular oil blend of gasoline to meet air quality regulations, which results in more expensive gas.
6. Alaska
Price of Gas per Gallon: $4.185
Alaska is a large enough state to have three different fuel markets. While the central region depends on the local Kenai Refinery, Southeast Alaska is largely supplied by US-flagged barges from Marathon’s refinery in Washington or the Burnaby Refinery near Vancouver, British Columbia.
Although gas is expensive all over The Last Frontier, the smaller communities that don’t have that much volume, particularly ones where the fuel has to be barged or flown in, always pay substantially more than Anchorage.
Alaska ranks 6th in our list of States with the Most Expensive Gas in 2023.
