What makes East Coast and West Coast gasoline more expensive?
The Energy Department’s weekly fuel price survey shows $3.941 as the national average for a gallon of regular gasoline. But the number has been driven recently by the East and West coasts, which have the highest prices in the 48 contiguous states.
A gallon of regular gasoline on the West Coast is averaging $4.231 a gallon. On the East Coast, the average is $3.911 a gallon.
That compares with the Rocky Mountain states ($3.748 a gallon), the Gulf Coast states ($3.802) and the Midwest ($3.905). Why is gasoline more expensive on both coasts?
One reason, the Energy Department said in a new analysis, is the source of the crude oil used by refineries in those regions. The Rocky Mountain states, for example, have been benefiting from the lower prices for Bakken crude oil for North Dakota. Transportation bottlenecks, like too few pipelines, means that Bakken crude can’t move to a wider number of states.
The Gulf Coast has a strong supply of gasoline for its own region.
The Midwest benefits least because its back-up supply comes all the way north from the Gulf Coast, the Energy Department said.
Refineries on both coasts are more dependent on some of the world’s most expensive oil, which is based on the price of Brent North Sea crude. Brent oil has traded significantly above the U.S. benchmark for crude on commodities markets. The oil benchmark for commodities trading in the U.S. is West Texas Intermediate crude.
In 2012, for example, West Texas Intermediate is expected to average about $106 a barrel. But Brent oil has traded above $120 a barrel several times so far this year.
RELATED:
