Oil has fallen below $66
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.