Econbrowser: Why gas prices vary so much from state to state

The question of national variations in pump prices came up after a recent post in which I quoted Parker Companies CEO Greg Parker talking about the reasons for increasing gas prices.

Well, check out the post Why do gasoline prices differ across U.S. states? from the excellent blog Econbrowser.

James Hamilton starts with a map of variations by county (below), and then works his way through the key reasons for those variations:

  • taxes
  • the fact that some states, like California, require higher-grade fuel
  • the cost of crude available to refineries in various parts of the country
  • the fact that transporting refined products has better infrastructure than transportation for crude

I suspect there might be some other issues at play too, including the amount of competition, the prevailing wages in any given area, and so forth, although I suspect that those pressures might have minimal impacts. Just a guess really.

There is much more detail — and lots of maps and links — in the Econbrowser post.