Why such drastic gas price differences in states starting with O?

September 6, 2006 6:04 PM

RegionalGasPriceFilter: Around August 8, the price of unleaded regular gasoline in Ohio and Oregon were the same, at about $3.01/gallon. Since then, the price of gas in Oregon has dropped only a nickel ($2.96/gallon), whereas the price of gas in Ohio has dropped a whopping 60 cents a gallon ($2.41/gallon) (figures via gasbuddy.com). Why?

More generally, gas prices in the west in general have not retreated as dramatically as those back east. My only theory has to do with the fact that western states are more proximate to the corroding Alaskan pipeline we heard about in the news a week or two ago.

But is that alone really enough to make such a drastic difference nationwide? What other factors might cause such a great disparity on such a large scale?

posted by saladpants to Travel & Transportation (14 answers total)

This article seems to be a good place to start:
Gas Price Differences, Explained
posted by chrisamiller at 6:06 PM on September 6, 2006

Best answer: Gasoline east of the Rockies and west of the Rockies are essentially separate markets, because transporting gasoline across the mountains is prohibitively expensive. So prices in each are set by the supply and demand specific to that market. Also, most gasoline sold in each market is refined at refineries within that part of the United States. So if gasoline has declined more in the eastern US, it means that either (1) the price of the crude oil input has declined more in that part of the country (not particularly likely); (2) demand has subsided more in the eastern US; or (3) the western US has greater supply pressures from full refineries.
posted by raf at 6:10 PM on September 6, 2006

Blue state, red state-- and they are fighting to keep it red.
posted by jamjam at 6:28 PM on September 6, 2006

i agree with jamjam. it's election time and alot is at stake in ohio, particularly.
posted by brandz at 7:24 PM on September 6, 2006

Yeah, jamjam, I was just gonna say:

Ohio voted for Bush
Oregon for What'shisface

I'd be really interested in a state-by-state gas price comparison; I'd bet a cool frosty beer the correlation would be more than just random...
posted by Aquaman at 7:25 PM on September 6, 2006

Here you go. The conspiracy theory doesn't really work out - Pennsylvania, Michigan, and Maryland have cheap gas, while Wyoming and Utah are above average. Even suburban Boston, which three years after the legalization of gay marriage has yet to experience the apocalypse, was running at $2.47 today. The west coast/east coast distribution schism is the best explanation, with NY and CT higher than average due to state taxes.
posted by Saucy Intruder at 7:44 PM on September 6, 2006

But Wyoming, Utah, Montana and Idaho (all red) are at least a dime a gallon cheaper than Spokane WA. I picked Spokane because it's a red city in a blue state and it's where I live, so I actually know the prices. Make of that what you will. (actually Saucy Intruder has it right, I think. Washington has pretty high gas prices.)
posted by faceonmars at 11:18 PM on September 6, 2006

It likely has to do with gas additives - while gas is "cheap" here in Michigan (depending on where you live), if you go a few hours west to, say, Chicago, gas is much more expensive even though the delivery system (pipe) is much cheaper and more reliable.

The problem with gas in Chicago is that the region there is required to use more gasoline additives to reduce the sulfer output from combustion in order to decrease the acidity of precipitation. Because there are a lot of valuable forest/water resources in Michigan and Ontario and the prevailing weather pattern goes west to east reducing acid deposition rests (unfortunately, sorry Chicago!) on those to the west...

Also, keep in mind that California has more enlightened environmental regulations than the rest of the country, so gasoline is probably more expensive due, again, to different additives. Because of the large market California has, I'm sure that other west-coast states also have to use the same, or similar, gasoline.
posted by sablazo at 5:38 AM on September 7, 2006

Best answer: I used to work in the oil industry in Southern California. Gasoline is more expensive in CA as a whole due to more stringent California Air Resources Board (CARB) requirements. Interestingly, the LA basin operates for the most part as a separate market - the gasoline produced by the handful of refineries in the area is all consumed locally. When a unit fails or malfunctions significantly at one of these refineries, gas prices spike in SoCal, because supply is just barely keeping pace with demand. We used to hear from colleagues when another refinery was having problems and would all run out and fill up our cars.

While I am far from an expert, I understand that there are many such local and regional markets. In addition to that factor, refineries vary in the quality of crudes they are able to process economically. The one I worked for was small yet able to run very low quality (cheaper, high-sulfur) crudes. Sometimes we would make more money selling intermediate feedstocks to other refineries than selling finished gasolines. Other refineries more than 3 times the size of that one (like many Gulf Coasters) typically run higher quality (less expensive, lower sulfur) crudes.

It's oversimplifying a bit - basically production costs vary depending on the types of crude available, refinery hardware, unit uptime and downtime, plus the regional and local markets. There's a lot that goes into that equation. It would be difficult to answer the question without some very detailed analysis of information that oil companies keep to themselves. I think it has little (if anything at all) to do with politics. Think about it - who is more likely to be the puppet, some politican or the oil company? Oil companies do whatever they want.
posted by FuzzyVerde at 6:51 AM on September 7, 2006

I also meant to add that I believe only CA gasoline complies with CARB standards. Gas for AZ and NV comes from other western markets. Their prices can still be affected by a significant shortage in CA. There is a lot of intermediate feedstock trading.
posted by FuzzyVerde at 6:58 AM on September 7, 2006

I've also heard conjucture that here in Ohio we are roughly in the middle of the pipelines that come down from the north and from the pipelines that come up from the gulf. If that were the case, there would be more potential product to be sold in this market and thus lower prices. (BTW, on Monday in suburban Cincinnati, I saw gas at $2.29/Gal).
posted by mmascolino at 11:03 AM on September 7, 2006

Could it be because every Ohioan I've ever met has bitched and moaned about the price of gas (whether it's been $1.49 or $3 a gallon)? Maybe the gas station owners just got tired of listening to all that carping and put the price down for a quiet life.
posted by essexjan at 11:35 AM on September 7, 2006

Odd. A few months ago, Wyoming had some of the cheapest gas. it was $0.70 cheaper than what I was buying in California. Now the cheapest gas seems to be in MO?

I give up. I'm going to buy a scooter.
posted by drstein at 2:25 PM on September 7, 2006

Oh, and the odd thing about that gasbuddy.com map - regular unleaded in the midwest was 85 octane, where it's 87 octane here in CA. Dunno if that makes much of a difference, though.
posted by drstein at 2:25 PM on September 7, 2006