Why is WA gas so expensive? Experts explain reasons Evergreen State has highest prices
This week, Washington overcame California as the state with the most expensive gas. The Evergreen State’s average price of gas has increased by over $1 since the beginning of the year while costs for the rest of the country have eased up over the months, according to AAA.
Washington’s price of gas is just under $5 per gallon, according to AAA. Meanwhile, neighboring states Oregon and Idaho have average prices of $4.61 and $3.98 per gallon, respectively.
For many Washingtonians, this raises a question: Why have our state’s gas prices risen so fast?
The answer: it’s complicated. There’s not any one factor that’s causing the price to rise, but some are impacting the market more than others. This is according to Mellani McAleenan, senior manager of public affairs with AAA Washington. Still, two factors are having the most impact on drivers’ wallets, McAleenan said via email.
Washington in general has always had relatively expensive gas compared to other states due to our state’s geographic profile, the AAA manager explained.
“While we don’t tend to think of Washington as geographically isolated, we are as it relates to gas,” McAleenan said via email. “Because of how mountainous the Pacific Northwest is, we only have supply lines that run north to south unlike states east of the Rockies, which have supply lines running every direction.”
McAleenan explains why Washington’s gas overcame California as the state with the highest fuel costs.
What determines cost of gas?
The price of regular gas is primarily determined by the cost of four things, per the U.S. Energy Information Administration:
Crude oil – 49%
Refining – 21%
Distribution and marketing – 15%
Taxes – 14%
Primary factors driving fuel price
For Washingtonians, two primary factors are driving the rapid rise in gas price, McAleenan said: supply and demand and crude oil prices.
Supply and demand
Heading into summer, more travelers will be on the road, which naturally drives up demand for gas, McAleenan said.
That higher demand comes at a time when British Petroleum’s Olympic Pipeline is shut down for maintenance, which is constricting the state’s fuel supply, McAleenan said. The pipeline transports gas, diesel and jet fuel from Blaine in Whatcom County down to Portland. Summer travel and the pipeline’s closure are combining to drive up the price at gas stations, McAleenan said.
McAleenan added that Washington buys products from California, which is more expensive than elsewhere in the United States.
Price of crude oil
The cost of crude oil is the leading component that determines consumer price of regular-grade gas. McAleenan said the price of crude oil is relatively low now, which is helping Washington’s cost of gas from becoming even more expensive.
AAA stated earlier this week that crude oil is trading for around $71 per barrel compared to $111 at this time a year ago.
Other reasons WA has high gas cost
Other factors exist that are impacting the cost of gas in Washington, according to McAleenan and other sources.
Gas taxes and carbon permits
McAleenan pointed out that Washington has a high gas tax compared to other states, which drives up costs.
At the time of reporting, Washington had the third-highest gas tax out of the 50 states at $0.49 per gallon, according to data platform WiseVoter. The national average is $0.29 per gallon.
Organizations like the Washington Policy Center have pointed some of the blame at state government for rising gas prices. Namely, the Washington think-tank states the the Department of Ecology’s Climate Commitment Act is to blame.
The climate initiative, which aims to cap and reduce carbon dioxide emissions by 95% by 2050, was approved in 2021. The passage of Senate Bill 5126 made Washington the second state behind California to implement a carbon-cap-and-invest program, according to Washington news site Crosscut.
The state ecology department held its first round of auctions for carbon credits on Feb. 28. The agency will continue to hold a quarterly auction four times a year.
At least one state official has even levied criticism toward the program’s impact on gas prices. Washington Sen. Mark Mullet, D-Issaquah, responded to Washington’s high gas prices Friday. He said the state’s carbon permits – which are being auctioned off at around $56 compared to California’s $30 per ton – are a factor driving up the cost of fuel.
“Putting a price on carbon pollution is an important part of responding to our climate crisis, but the prices for carbon permits at our auctions have been way too high,” the senator stated in the release. “I think the Department of Ecology is sort of dropping the ball here, and it’s the people of Washington who are having to pay for it.”
When will WA gas prices fall?
Washington’s price of gas will eventually come down, but when is hard to predict, McAleenan said. She said prices might stabilize once the Olympic pipeline is back in service. She added that prices likely won’t come down for good until after Labor Day.
This story was originally published June 24, 2023 at 6:30 AM.
