Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on November 30, 2014

Bookmark and Share

Eight States Where Gas Will Drop Below $2

Eight States Where Gas Will Drop Below $2 thumbnail
Experts have already begun to mention the chance that the average price for a gallon of regular gas will drop below $2 in some parts of America. There are several states where this is highly likely. As a matter of fact, the prices in these states could drop below $2 as early are the start of next year.

Most of the states likely to post sub- $2 gas have three things in common. These are the general drop in oil prices, proximity to large refineries, and low state gas taxes.

The first among these has already begun to have an out-sized influence. Oil has fallen below $66. Just five days ago, the price was nearly $80. In late June, it was close to $100. If oil stays below $70, it could knock $.20 to $.30 off the average price of a regular gallon of gas nationwide by itself, if the evidence of the last month as an indication. Over that period, the price of gas nationwide has dropped from $3.03 to $2.79, according to Gasbuddy.

The eight states were gas prices are likely to fall below $2 are Mississippi, Alabama, Louisiana, Texas, Oklahoma, South Carolina, Missouri, and Tennessee.

Several of these are either on the Gulf of Mexico or states adjacent to ones that are. Each already has gas prices below $2.60. In all but one, the price has continued to fall over the last several days.

Mississippi, Alabama, Texas, and Louisiana are directly on the Gulf of Mexico and close to the large refineries in Texas, which, taken together, are among the biggest block of refineries in the world. Oklahoma and Tennessee border at least one of these four states. So, each has the advantage that among the variable costs of gasoline is the distance it must travel from refineries to retailers.

Finally, state gas tax rates have a profound affect on total gas prices. An illustration of this is that the state with the third highest gas tax is New York where it is $.50. New York also has the third highest gas price in the U.S. at $3.18. The two state where gas prices are higher are distant from supply–Alaska and Hawaii

According to the Tax Foundation, last year, South Carolina had the 47th highest gas tax among all states at $.168. Oklahoma was 46th at $.17. Missouri was 45th at $.173. Mississippi was 44th at $.188. Louisiana was 38th at $.20

Gas prices in eight states should be below $2 within a few months.

24/7 Wall Street 

12 Comments on "Eight States Where Gas Will Drop Below $2"

  1. Davy on Sun, 30th Nov 2014 4:09 pm 

    If I am still paying $3.60 for diesel and regular is bellow $2 someone is going to hear about it.

  2. Plantagenet on Sun, 30th Nov 2014 4:43 pm 

    Diesel is bad for the environment. It should be priced higher than gasoline or NG.

  3. Makati1 on Sun, 30th Nov 2014 7:19 pm 

    If gas drops to $2, there will be more to worry about than the price spread, I think.

  4. Davy on Sun, 30th Nov 2014 7:50 pm 

    I was trying to be funny but some people have a limited sense of humor.

  5. redpill on Sun, 30th Nov 2014 8:01 pm 

    Well, if we see more follow through on the downside, I’d start to worry about how secure my dividend payment was from any oil majors I might have in my portfolio. I ditched my BP 2 weeks ago and last Friday vindicated my reasoning.

    And for those holding fracker debt, I’d imagine there’s some major rectum puckering going on.

    We’ve seen a lot of speculation that the West is somehow doing this to hurt Russia, but that country is much better positioned to “hit the mattresses”, as it where.

    I’d like to float the possibility, especially considering the lack of protest from Russia about not cutting production, that this is instead an effort to undermine the Western oil majors and fracking in general, knowing that any prolonged period of low prices will cause the majors to divest in a damaging way and put the frackers against a debt firing squad.

    Well, let’s see what Monday tells us.


  6. Norm on Mon, 1st Dec 2014 3:16 am 

    If gasoline is less than $2 a gallon in just some of the states, move there. Buy a Sedan De Ville. Start it up, head to the drive-in and eat cheeseburgers.

  7. Davy on Mon, 1st Dec 2014 5:49 am 

    Red, I feel no one is fully in charge of this global oil market. Let’s just say OPEC did make cuts possibly even with a token Russian cut. We are talking significant cuts, what then? Knowing what I have been reading over and over over on ZH the economy is not healthy. This supply glut is from demand destruction not a production glut. I can tell you that because if you refer to earlier forecasts from a few years ago where the EIA/IEA used their excel goal seek to forecast BAU oil growth and production it is clear growth is subpar we are well off those forecasts. Those forecast were healthy growth forecasts.

    We know from many sources China is in a slowdown surely even worse than the official statistics. Significant oil consumption in China is reserve buildup not actual economic activity. Europe is deep in deflation, unemployment, and deficits. The US has a 1%er market driven growth but real main stream growth is subpar. The “what then” from an oil cut is most like a higher price knee jerk reaction then further economic headwinds and further growth reductions. You just can’t get blood from a turnip.

    The Fed QE has dialed down. This QE reduction was not because what is said officially that growth has broken out and repression must be reduced for fear of inflation. The real reason is diminishing returns to debt liquidity. We see multiple distortions in the markets and fundamentals of the economy from QE. We still have interest rates near zero. Notice there is no effort to raise interest rates. The reason is the economy can’t handle it. The same is true of oil price rise which is nothing more than a tax on discretionary spending.

    This distorted view of KSA/OPEC oil price move is the typical corn porn view that all is well enough. The corn porns believe we will get through this rough patch with a return to a normalcy of sorts. The corn porns are worried we know that. We can see this from the propaganda bitches when we get multiple articles in defense or on the attack. All you have to do to get a true picture of a situation is look to where the propaganda is the strongest. We know propaganda today is generally the negative sort. It is not actually a crow about how wonderful things are it is a defense of what the corn porns want the situation to be.

    I firmly believe we are in a bumpy descent that started a few months ago as the effects of debt hit diminishing returns. The liquidity injections and subsequent wealth transfer was the only real growth to speak of. We were robbing Peter to give to Paul to show growth. There is little to bleed from Main Street, markets are in the stratosphere, and QE is over from lack of juice. We are truly at the end game of BAU. BAU is in a slow death like a dead man walking. The question is how long will this slight bump down continue before all hell breaks loose. Descent is random and dysfunctional so that is anyone’s guess but I imagine a year or two. There is a great deal of cannibalization left to do.

  8. Kenz300 on Mon, 1st Dec 2014 9:17 am 

    Pipeline from Canada…………. who needs it?

    The Keystone pipeline benefits who?

  9. Mike999 on Mon, 1st Dec 2014 9:44 am 

    I drive the Honda INSIGHT, whatever you’re paying for gas, I’m paying 60% less.

    And my next car will be an EV where I’ll be paying 90% less.

    This problem is already solved.
    I really don’t care what the price of gas is.

  10. Apneaman on Mon, 1st Dec 2014 12:45 pm 

    It seems that the Saudis are taking advantage of the situation. Since demand is down why not take advantage and knock off some of the competition.

    Inside OPEC room, Naimi declares price war on U.S. shale oil

  11. redpill on Mon, 1st Dec 2014 7:21 pm 

    Well, this sure is an interesting comment:

    “The lower the price of oil goes, the more likely it is that companies will struggle to recover their costs,” he said.

    Following the OPEC’s production policy decision, Russian oil tycoon Leonid Fedun, vice president and board member at the country’s second-largest oil company OAO Lukoil, warned of a similar risk.

    “In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,” Fedun said, as quoted by Bloomberg. “The shale boom is on a par with the dot-com boom. The strong players will remain, the weak ones will vanish,” he said.”

  12. Kenz300 on Wed, 3rd Dec 2014 11:59 am 

    Electric, flex-fuel, biofuel, hybrid, CNG, LNG and hydrogen fueled vehicles are all ways to dodge the oil monopoly on transportation fuels.

    Better yet cities need to become more people centered and less auto centered. By making cities friendlier to those people that walk, bicycle or take mass transit they make cities more resilient and less vulnerable to fossil fuels.

    Climate Change is real….. we will all be impacted by it. We can deal the the cause or we will deal with the impact.

Leave a Reply

Your email address will not be published. Required fields are marked *