Why gasoline prices are highest in the West

A Toyota advertisement is shown on a World Gasoline station pump in Sunnyvale, California in 2008. | Paul Sakuma, Associated Press

Reduced refining capacity coupled with increasing demand are some of the reasons fuel prices are so much higher in California, Oregon, Washington, Idaho, Utah, Nevada and Arizona than elsewhere in the country

Food prices aren’t the only thing making this year’s Thanksgiving more expensive than past celebrations. Driving to that family gathering is also pricey especially if you are traveling in the West.

Seven of the top 10 states where gasoline prices are highest are in the West, with California ($4.71 average per gallon) at No. 1, according to the latest gas price data released Wednesday by the motoring and leisure travel organization AAA.

AAA Gas Prices survey

In an effort to lower prices at the pump and slow rising inflation, the United States and several other countries announced this week they are tapping into their oil reserves.

But the effect of increasing the oil supply won’t be felt at the pump until mid-December at the earliest, as the Deseret News reported Tuesday.

How much of an impact that will have on gasoline prices is questionable, according to a report in The Wall Street Journal.

“Given that the news has been rumored for several weeks, the market reaction may be quite muted,” Bjornar Tonhaugen, head of oil-market research at consulting firm Rystad Energy, told the Journal. “For drivers wondering if gasoline prices will get lower … the reality is that this may not happen at all, or only with a significant lag time.”

And it likely won’t change the West’s dubious ranking as the most expensive region to fill up. Here’s AAA’s gasoline prices by state as of Wednesday, from highest prices to lowest:

Regular retail gasoline prices in the Intermountain and West Coast regions have been higher than the national average for months, primarily because of declining refining capacity, according to a recent report by the U.S. Energy Information Administration.

Motorists consume almost all of the gasoline produced in the two regions, so the closure of refineries in these regions “have reduced refinery output of gasoline, which in turn has lowered inventories and contributed to higher prices,” the agency reported in August.

The agency noted two refinery closures in mid-2020 reduced refinery capacity: HolyFrontier shuttering its plant in Cheyenne, Wyoming, and the closure of Marathon Petroleum’s Martinez refinery in California. Applying further constraints on future gasoline supply in the West will be Phillips 66’s anticipated transition of its Rodeo refinery in California to renewable fuels production.

The agency also attributed upward pressure on pump prices to gasoline inventories in the Intermountain West being 15% less than the five-year average, while demand for gasoline has increased with people are driving more in the past year visiting tourist sites in the region.

Meanwhile, as the cost of gasoline rises in the West, many of those same states are ranked as the most accommodating in the nation to electric vehicles, according to a recent survey.

Bumper.com, which provides VIN numbers and other data for auto purchases, looked at 10 metrics related to financing and operating electric vehicles to come up with a ranking of which states are most friendly to owning an electric vehicle. t

Seven out of the top 10 states were located in the West. Utah was ranked second overall and landed in the top 10 in each of these areas: financial incentives, infrastructure, charging station growth and electric vehicle registrations as a percentage of all vehicle registrations.

Why gasoline prices are highest in the West
Source: Gabriella Pinoys