Gas: Why I'm paying $4 but my neighbor isn't?

Whenever a gas price story is published on this site, astute readers write in to say that gas is in their area is much more expensive than the nationwide average.

It's true, in many cities gas is already well over $4 a gallon on Tuesday.

Prices at the pump can vary widely among states, due in large part to vastly different levels of gasoline tax. More

The average U.S. price for a gallon of regular is $3.38, according to AAA. But the price in Hawaii, the most expensive state in the country, is $3.78. Meanwhile, in Montana it's a mere $3.07.

Gas prices vary a lot depending on the state, city, and even the block where you buy your gas.

The biggest reason is taxes. 75% to 80% of the disparity between states is due to taxes, according to Rayola Dougher, senior economic advisor for the American Petroleum Institute.

First there's the federal gas tax. It's a standard 18.4 cents nationwide. Then states tack on an additional excise tax. That varies from just a few cents to over 20 cents. On top of that, some states add an additional sales tax. Then in a few unlucky locales, county and city governments levy their own sales tax as well.

Some states use these taxes solely for road maintenance and construction, Dougher said, while other places put the money into their general fund.

Added all up, gas taxes can range from a low of 26 cents in Alaska to a high of 66 cents in California, according to API.

Aside from Alaska and New Jersey, most of the low tax states are in the South.

Drivers here tend to spend the highest percentage of their income on gasoline, often thanks to long commutes and lower wages. The fact that people here are already shelling out a big chunk of their check on gas may make it more difficult for southern states to raise their gas tax.

States in the Northeast and on the West Coast have the highest gas taxes. People in those regions tend to have higher incomes, access to better public transit and spend a smaller portion of their paychecks on gasoline.

 

While taxes make up the biggest reason for the price disparity between states, they aren't the only source.

Transportation, distribution costs and distance from refineries can also add to the price of gas.

Even within cities gas price varies wildly. In New York City, a Citgo service station located on the Hutchinson River Pkwy, a heavily traveled thoroughfare in the Bronx, sells gas for $4.09 a gallon, according to price tracker Gasbuddy.com. Meanwhile in Staten Island, the Power Test service station sells a gallon for $3.46.

Also, where the crude oil comes from plays a role in gas prices.

In the Northeast a lot of oil and gasoline comes from Europe, where prices have been higher.

Alaska, Hawaii and California, the three highest priced states, rely on crude oil form Alaska which is heavy and more difficult and expensive to turn into gasoline.

This is why Alaska's gasoline, despite having the lowest taxes, is one of the most expensive in the nation.

Plus, most of the gas in the West Coast must be formulated to meet California's strict emissions standards, further driving up the price.

States in the rocky mountains, on the other hand, are enjoying the benefits of a recent boom in domestic energy production.

Formerly inaccessible oil from shale rock formations in Colorado and North Dakota doesn't have to travel far to reach local refineries, said Stan Dempsey, head of the Colorado Petroleum Association.

Plus, natural gas liquids, a byproduct from the area's burgeoning number of natural gas wells, can also be turned in gasoline. Both of these domestic energy products are far cheaper than oil bought in other markets, especially overseas.

"We're just in good shape in terms of supply," said Dempsey.

The result is that Wyoming, Colorado and Montana now have the cheapest gas in the nation, despite a tax rate that is about average.  

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Toyota Motor Co. is investigating engine problems in some Lexus models and may issue a recall.

Small valve springs that were made from low-quality metal could crack, potentially causing engines to stall in a total of in a total of 270,000 vehicles worldwide, said Toyota spokesman Paul Nolasco. In most cases, owners will experience only abnormal idling or engine noise, Toyota said in a written statement, although even that was described as a "remote possibility."

Approximately 137,000 vehicles in the U.S. are potentially affected, the automaker said in a statement released Thursday afternoon. The cars sold in the U.S. that could be include the Lexus IS 350, GS 350, GS 460, GS 450h, LS 460, LS 600hL. All are luxury sedans and two, the GS 450h and LS 600hL, are hybrid cars.

Only cars from model years earlier than 2010 could be involved, Toyota said.

Also involved is the Toyota Crown, a large luxury car that is not sold in the United States.

Toyota has not received any reports of injuries or fatalities related to the issue, the automaker said.

Toyota's Lexus luxury division will announce a remedy for the problem as soon as possible, the automaker said in its statement.

"In the meantime, we sincerely apologize to our customers for any inconvenience and request that they contact their nearest Lexus dealer if they believe there is a problem with their vehicle," said Mark Templin, general manager for Lexus in the U.S.

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Ferrari 458 Italia - Stop the press! Ferrari has officially unveiled the 458 Italia, the long awaited successor for the mid-engine Ferrari F430, and the design is leaving our editorial staff speechless! The super car looks impressive from any angle as it has a design that has never been seen before on a Ferrari model. The high performance sports car comes complete with a new engine, improved aerodynamics, upgraded handling and improved instrumentation and ergonomics inside the cabin.

The wedge shaped body was penned by Pininfarina, while the interior was left up to the work of Donato Coco, Ferrari’s Chief Designer. While you might say that the exterior more or less based on the traditional Ferrari lines, there are also a few revolutionary new ones, all intended to improve the car’s aerodynamics. The front end features a single wide mouth opening to let a specific amount of air in paired with a vent on either front fender. Out back there are a pair of large ducts just before the taillights, all designed with aerodynamic contours and partitions that direct air directly into the radiators and away from the new flat underbody. The nose also sports small aeroelastic winglets which generate downforce and, as speed rises, deform to reduce the section of the radiator inlets and reduce drag.

Under the hood Ferrari has placed a 4.5 Liter V8 engine equipped with the traditional Ferrari flat crankshaft that gives the mid-engine sports cars their signature top end bark. The unit produces 570 at a rather high 9000 RPM which gives the future super car a power output of 127 HP/Liter. Weighing in at only 3042 pounds, the new Ferrari will rocket from 0 to 60 MPH in just 3.4 seconds and won’t stop until it hits a top speed of 202 MPH.

The Ferrari 458 Italia was named the 2009 Top Gear car of the year and can be yours for around $275,000.

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General Motors will reinstate 600 dealers terminated as part of its bankruptcy proceedings, the company announced Friday.

That represents more than half of the dealers that lodged an arbitration appeal last month to fight their planned shutdown. In May, GM notified 2,000 dealers that they would lose their franchise license in October 2010. But Congress demanded that the company give dealers an appeal process, and 1,100 of those targeted for shutdown met last month's deadline to file for arbitration in an attempt to regain their license.

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Toyota Motor Corp. CEO Akio Toyoda accepted an invitation to testify next week before a congressional committee that is investigating the automaker's safety problems. “I have received Congressman Towns' invitation to testify before the House Committee on Oversight and Government Reform on February 24 and I accept," Toyoda said in an e-mailed statement.  

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Ford Motor Co. will drop one shift and 900 workers at the AutoAlliance Mustang plant in Flat Rock, Mich., to increase the plant's efficiency, Ford spokeswoman Marcey Evans said today.

A majority of the workers being cut will have an opportunity to transfer to a different plant, Evans said. The cuts will take effect in July 2010.

“We'll be talking with employees over the coming months about their opportunities,” she said. “It's too early to give a number on how many will stay.” 

Automotive Editor: Dustin Garrido | This e-mail address is being protected from spambots. You need JavaScript enabled to view it