Why are gasoline prices higher in some regions than in others?
Although price levels vary over time, Energy Information Administration (EIA) data indicate that average retail gasoline prices are often highest in certain States or regions (Figure 3). Besides taxes, there are other factors that contribute to regional and even local differences in gasoline prices:
Distance from supply – Retail gasoline prices tend to be higher with greater distance from the source of supply: ports, refineries, and pipeline and blending terminals. About 66% of the crude oil processed by U.S. refineries in 2007 was imported, with most transported by ocean tankers. The U.S. Gulf Coast is the source of about 40% of the gasoline produced in the United States and the starting point for most major gasoline pipelines.
Supply disruptions - Any event that slows or stops production of gasoline for even a short time, such as planned or unplanned refinery maintenance or the refinery shutdowns that occurred when the Hurricanes Katrina and Rita hit the Gulf Coast in 2005, can prompt bidding for available supplies. If the transportation system cannot support the fl ow of surplus supplies from one region to another, prices will remain comparatively high.
