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Top 10 States for Highest Gas Prices

By Insurance.com Posted : 01/16/2009

Although the most recent official data from the federal Energy Information Administration shows current month-by-month trends, these are the top 10 states with the highest average monthly gas prices from January 1983 to October 2008.



  1. Alaska
  2. Hawaii
  3. Vermont
  4. Nevada
  5. California
  6. Oregon
  7. Wyoming
  8. Arizona
  9. North Dakota
  10. Maine

Historically, gas prices fall along with the leaves. The summer driving season has traditionally been when we see the highest prices at the pump, and gas prices usually drop again at the start of the school year as travel diminishes.

Gas Prices Are Unpredictable.
2008 was an unforgettable year in many ways, and gas prices were no exception. They reached over $4 a gallon in May, but then fell to below $2 a gallon due to the global economic downturn and lower demand. However, renewed worldwide demand and overall level-to-decreased production could cause long-term increases in the price of oil and gasoline. The price of crude oil hit a record high of almost $150 per barrel in July, but fell to under $50 a barrel near the end of 2008. Whether we will see long-term prices rise or fall depends on the energy policies of the Obama administration and other emerging economies around the world.

Should We Lower Gas Taxes?
Federal, state, and local taxes were traditionally a large component of the retail price of gasoline. However, during the 2008 price spikes, taxes accounted for only about 15% of the cost of a gallon of gasoline. Federal excise taxes have held steady at 18.4¢ per gallon since October of 1997, and basic state taxes average about 21¢ per gallon. Unfortunately, since they only add around 40¢ a gallon, lowering gas taxes would not significantly lower the price of gas. In addition, since gas taxes are mostly used to fund road maintenance and public transportation, the reduced tax revenue would have to be raised in other ways. Cities, states, and the federal government would raise the overall tax burden even for those who don't drive. If you still think we're paying too much for gas, consider this: Europeans are paying an average price of around $7.50 per gallon of gasoline, a large part of which is tax.

Some States Add More Taxes.
The 21¢ per gallon is an average figure, meaning some states are adding more tax, and others are adding less. States such as Hawaii which are far from the refineries pay more due to higher transportation costs. And residents of California are saddled with expensive gasoline because the state operates its own reformulated gasoline program with more stringent requirements than federally-mandated gasoline. California prices are historically higher and more variable than others because there are relatively few supply sources for its unique blend of gasoline.

Will Gas Prices Cause a Permanent Shift?
Interestingly, gas prices rose to a point in 2008 that caused Americans to change their driving habits. This caused an accelerated demand for fuel-efficient cars, such as hybrids and economy cars. Nearly all carmakers have hybrids either in production or planned for future release. It remains to be seen, however, if the drop in gas prices at the end of 2008 will cause a return to earlier levels of travel, or if the trend toward less travel will be permanent. Historically, cheaper gas has led to more driving, but people who switched to public transportation, carpooling, and cars with better gas mileage may counteract this tendency.

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Originally posted September 17, 2004.

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