Why Louisiana Drivers Often Pay Less at the Pump
Louisiana’s location near major Gulf Coast refineries, relatively low state fuel taxes and regional fuel competition help keep prices below the national average. But global oil markets and supply disruptions still affect what drivers pay.
Louisiana drivers were paying less than the national average for regular gasoline Thursday, though prices remained high. AAA listed the state average at about $3.97 per gallon on Oct. 1, compared with $4.41 nationally—a difference of roughly 44 cents.
One reason is geography. Louisiana sits within the Gulf Coast, the nation’s largest refining region. Refineries turn crude oil into gasoline, and being close to those facilities can reduce the cost of moving fuel to terminals and gas stations. The Gulf Coast holds just over half of U.S. refining capacity, according to the U.S. Energy Information Administration.
Taxes also help explain the gap. Louisiana charges 20 cents per gallon in state motor fuel tax. That is a relatively low rate compared with many states, though drivers also pay the federal gasoline tax and may face local taxes and other costs.
Prices can also vary with the distance fuel must travel, local supply, station competition and operating costs, the EIA says. Those factors help make prices different from one region to another, even when crude oil is traded in a broader market.
Louisiana’s lower average does not mean drivers are insulated from price increases. Crude oil costs, refinery disruptions and changes in fuel demand can push prices up across the country. The state’s location and tax rate can provide a relative advantage, but they cannot fully shield motorists from shifts in the wider energy market.
