Why is gas more expensive in Phoenix Arizona than other states?

Well it's complicated...

This post is a little departure from my typical political commentary.

I recently drove from Minneapolis to Phoenix and noticed that gas prices were noticeably higher in Arizona (and even higher in Phoenix) than in the seven states I passed through on the way. Phoenix is subject to the same fundamental cost gas price changes as any state (OPEC, domestic production, refinery shutdowns, tariffs, the war in Ukraine, etc.), so I assumed it must be state and local taxation, but it is not.

Below are state averages per AAA as of 12/10/24 for a gallon of regular:

• Minnesota $2.81 (my home state)

• Iowa $2.70

• Missouri $2.68

• Kansas $2.66

• Oklahoma $2.52

• Texas $2.60

• New Mexico $2.76

• Arizona $3.17 (the Phoenix average is even higher at $3.21)

The national average is $3.01, and the highest state is Hawaii at $4.60 (the highest in the lower 48 is California at $4.36).

I wondered why Arizona was so much higher than the other seven states I passed through. Additionally, seeing many Phoenix gas pumps defaced with Joe Biden's “I did that!” stickers over the last few years provoked my curiosity.

The first thing I checked was the gas tax—it was not that. Arizona’s gas taxes are the fifth lowest (19 cents) in the nation and lower than all but one of the states I passed through (New Mexico was the only one lower—barely—at 18.88 cents). So it was something else.

I did some more research and learned there are several reasons:

• Arizona has no refineries and must import all its gas from neighboring states.

• Phoenix gets most of its gas from California, and it takes seven days to ship gas from California to Phoenix (that trip alone adds cost) - California refineries tend to produce the most expensive fuel in the nation because of that state's taxes and environmental regulations.

• Arizona politicians have legislated an environmentally cleaner gas blend than other states, which adds cost.

• All states have higher gas prices in the summer due to the federally mandated “summer blend” to minimize evaporation, which adds cost. Arizona’s summer blend period is more extended than that of other states.

• The population in “The Valley” (the Phoenix metro area) is one of the fastest-growing metro areas in the nation, creating a high demand for gas.

• The Phoenix metro public transportation has a lower market share than most large US cities - it is more car-dependent in the sprawling “Valley.”

So, as I said in this post's subtitle, the higher gas cost in Phoenix is complicated.