Oil and Gas

America's gas price gap widens

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Gas wars brewing at the pump

This week, an Oklahoma gas station posted a $1.99-per-gallon price, making it first in the nation to drop below $2. If you aren't living in the Sooner State, though, that won't mean much. That's because we haven't seen gas prices this far apart in 10 years.

First, notice how gas prices in all 50 states (mushed together in the following graphic) mostly track each other on the way up and down, according to data from GasBuddy:

Let's take out all the mushiness and focus only on the extremes—the states with the most and least expensive average gas prices month to month. Now you see just two lines, instead of 50.

Due to differences taxes and geographic access to gas, certain states tend to be consistently higher or lower than the national average, which is normal. Right now, however, we are seeing something new: the widest price gap in 10 years of data tracked by GasBuddy:

As of this month, Hawaii had the most expensive gas, averaging $3.853 a gallon. That's $1.41 more than the state with the cheapest average gas price, Missouri, where it was $2.446. The spread tops the $1.33 gap in November, which had already been above anything we had seen before. In general, there also has been a consistent trend line toward larger gaps.

"When gas prices drop, that's when the gaps widen out," said Patrick DeHaan, a senior petroleum analyst for GasBuddy. "Stations can be more aggressive, choosing to accept less margins by dropping prices." He points out that there is more unification among stations on the way up. "Price wars play out on the way down, and that's when states tend to break apart from each other," he said. Notice the huge recession-driven gas price drop in 2008 caused large gaps among the states.

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Certain states tend to find themselves on one extreme or the other. In the past 10 years, only three states have held the title as the most expensive, with Hawaii winning that 101 of the past 120 months, while the battle for cheapest state has been much more competitive. In most months (66 out of the past 120), South Carolina or Missouri has had the best prices for consumers.

States with the highest gas prices, past 120 months

# Months State
101Hawaii
11Alaska
8California

States with the cheapest gas prices, past 120 months

# of Months State
36South Carolina
30Missouri
17Wyoming
14New Jersey
7Oklahoma
4Arizona
4Montana
4Utah
1Colorado
1Louisiana
1Mississippi

DeHaan notes that the Rocky Mountain states generally lag changes to the national average. They tend to be a month behind the country because of lower volumes and access to cheap Canadian crude. New Jersey tends to have among the lowest gas taxes, explaining its position on the list.

"The price drops may not be over yet," he said. "The national average will probably fall to around $2.50 soon."

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