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Cities With The Best Gas Prices
By Hannah Elliott www.forbes.com
Gas prices nationwide have spiked dramatically since Christmas. Last week,
the U.S. average for a gallon of unleaded was $2.63; as of Jan. 8 it was
$2.72 (up more than $1 per gallon from $1.71 a year ago--and rising). Oil
prices are above $81 per barrel for the first time since November 2009.
In Auburn Hills, Mich., a Detroit suburb, prices at the pump have risen
more than 15 cents per gallon in the New Year. The difference hasn't gone
unnoticed.
In order to accurately determine cities that consistently register low
prices, it's important to look at the price of gas over time, not on just
a given day or week. To wit: Billings, Mont., had some of the cheapest gas
in the nation on Jan. 4 ($2.49 a gallon), but by Jan. 5 the price hit
$2.55, placing the city 19th on the list. Patrick DeHaan, the senior
petroleum analyst for GasBuddy, says remote areas in Montana, Idaho and
Wyoming are often "a few weeks or even a month late to the party," which
can skew their pricing.
"Since the population is so sparse up there, gas stations don't go through
gasoline as quickly, so they're able to pass the cost savings on from fuel
purchased a few weeks ago to people paying at the pump today," he says.
Despite some showings from more northerly locales (Indianapolis, Salt Lake
City), our list is dominated by Southern cities: Lubbock and Houston,
Texas; Spartanburg, S.C.; and Tulsa, Okla., all made the grade.
In these cities, low prices have to do with proximity to--and ease of
transportation from--the Gulf of Mexico. It also helps that places like
Georgia, Oklahoma and South Carolina have some of the lowest state gas
taxes in the nation.
On the other hand, analysts are blaming harsh weather in the Midwest and
Northeast for unseasonably high gasoline prices in California ($3.08 per
gallon on San Francisco on Jan. 8). The market rally during the last weeks
of December 2009 also contributed to the rise--it's what forced oil prices
above $80 per barrel on the New York Mercantile Exchange. As the U.S.
economy slowly gains traction this spring, and demand for gas increases,
pump prices in places other than California will inevitably rise as well,
DeHaan says.
The strength--or weakness--of the dollar also contributes to gas price
fluctuation. It will continue to "remain a potent factor in oil price
swings in the near future as the economic recovery takes shape," according
to AAA's Jan. 4 Fuel Gauge Report.
All Up in the Air
But a precise cause of gas price variation within a given region has been
difficult both to pinpoint and to predict, especially in the last 18
months, says Mark Gygax, a 52-year-old petroleum engineer in Midland,
Texas. Gygax has tracked gasoline and oil prices since 2005--and they
sometimes correlate less closely than you might expect.
In the spring of 2006, for instance, the price of West Texas Intermediate
oil averaged $67.50 per barrel, while gas prices in Midland oil averaged
$2.79 per gallon. During the last half of 2009, that oil averaged near $68
a barrel, but gas prices after June 1 ranged from $2.30 to $2.57,
averaging $2.47 a gallon. The bottom line: While the cost of a barrel of
oil was the same both times, consumers spent 30 cents less per gallon
during the second half of 2009 than in 2006.
After more than 30 years in the industry, Gygax says he still doesn't know
exactly what causes such discrepancies.
"Gas stations are quick to react to prices going up but when oil prices
start falling down, they tend to be a little bit reticent to move them
back down," he says. "I think that's one of the things that makes most of
the country sort of suspicious about the oil industry and producers: The
prices go up quick but come down reluctantly."
