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Explaining gas price differences in Arizona

California High Gas Prices
Posted at 4:49 PM, Mar 11, 2022
and last updated 2022-03-11 18:50:45-05

PHOENIX — It already seems like an eternity, but back in January, the average per-gallon cost of gas in the United States was $3.41. According to the US Energy Information Agency, the biggest contributor of gas prices is the cost of oil which accounted for 56% of the total cost for a gallon of gas in January.

Because of this, it stands to reason that today’s much higher $4.33 per gallon average price of gas has a lot to do with oil futures being over $100 a barrel since early March. Even with these increases, prices are not uniform across Arizona. The average per-gallon cost of gas ranges from $4.27 to $4.67 county to county. Much of this range is due to differences in distribution and refining.

Gas On the Rise since the Great Recession

Data from the US Energy Information Agency shows that the weekly national average price for regular gasoline began increasing in early 2020 compared to the same time last year, peaking at a 68% year-over-year increase in April of 2021. The growth is similar to increases experienced shortly after the 2008 great recession but with one significant difference. Year over year average gas prices have seen 52 weeks of growth over 40% every week. The 2009 weekly price surges only sustained those levels for about 26 weeks.

Gas Price Differences From County To County

According to AAA, the average cost of gas ranges from $4.27 a gallon in Apache county to $4.67 in neighboring Coconino County, with the average cost statewide being $4.58 and prices are generally lower in southern Arizona counties.

Different taxes do not figure into the difference for most of Arizona’s counties. Most Arizonans pay $0.37 per gallon in taxes for gasoline which is split almost evenly between the state and federal government. Arizona’s two most northeastern counties, Apache and Navajo, are home to large Native American tribal lands that are exempt from federal gas taxes which helps to account for their lower average cost per gallon.

For Arizona’s other counties, the difference comes down to distribution and environmental regulations.

Distribution and Environmental Costs

Arizona has no gas refineries of its own so it must rely on gasoline coming from other regions of the country. The most cost-efficient delivery method is pipelines, of which Arizona has one. The Kinder Morgan southern pipeline runs from Los Angeles through southern Arizona to El Paso, TX. The pipeline brings gas refined both in California and Texas. Being nearer to the pipeline means less transport costs for southern Arizona counties.

The Kinder Morgan pipeline runs through Phoenix and Pinal, but prices in those two counties are still on the higher end. This is due to EPA regulations that require a cleaner burning, and more expensive, blend of gas in the Valley of the Sun during the winter months because of poor air quality.

It Still Comes Down to Oil

In terms of the overall cost of gas, however, distribution and environmental costs are mostly fixed, meaning ultimately the price of gas moves with the price of oil. There is some good on this front as the West Texas Intermediate oil prices have decreased in the past few days, meaning gas prices may begin to stabilize soon.