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Why Are Gas Prices So High In Washington? A Comprehensive Analysis

The average price of a gallon of gasoline in Washington is slightly under $5. The average price of a gallon of gas in Oregon is $4.61, while in Idaho it is $3.98. This prompts the question for many Washingtonians: why are gas prices so high in Washington?

Author:Emmanuella Shea
Reviewer:Frazer Pugh
Nov 05, 2023
Washington now has the highest gas prices in the country, surpassing California. The average price of gasoline in the Evergreen State has risen by more than a dollar since the beginning of the year, while prices have leveled out in the rest of the nation.
The average price of a gallon of petrol in Washington is slightly under $5. The average price of a gallon of gas in Oregon is $4.61, while in Idaho it is $3.98.
This prompts the question for many Washingtonians: why are gas prices so high in Washington?
It's a knotty problem. There is no one element driving this increase in price, albeit some are having a larger effect than others. Even so, there are two things that are having the most effect on drivers' wallets. Washington's geographical profile has meant that our state has traditionally experienced higher than average gas prices.

Why Are Gas Prices So High In Washington?

As of June 28, 2023, Washington State is grappling with the ignominious title of the highest gas prices in the nation, averaging a staggering $4.99 per gallon. This substantial premium of $1.33 above the national average of $3.56 has left consumers questioning the driving forces behind this startling disparity.
Even in comparison to its neighbor, Oregon, which usually mirrors Washington's gas prices closely, the Evergreen State outpaces its gas costs by 34 cents, with Oregon prices resting at $4.65 per gallon.
The catalyst for this relentless upward trajectory in gas prices can be traced back to the beginning of 2023, following the enactment of the Climate Commitment Act (CCA). The CCA introduced a system of charges to businesses based on their carbon dioxide emissions.
The debate over the reasons for these soaring gas prices is contentious and multifaceted. Supporters of the CCA argue that the culprits include corporate greed, surging summer demand, and maintenance activities on the Olympic pipeline. Their stance revolves around companies leveraging the new law as an excuse to engage in price gouging, aiming to amass monopolistic profits.
However, an alternative viewpoint, presented by the Washington Policy Center, focuses on the direct impact of the gasoline emissions tax imposed by the CCA. This tax alone amounts to a significant 44.3 cents per gallon, serving as a direct catalyst for the increased gas prices.
While it's true that gasoline prices typically surge during the summer, a contributing factor involves the evolving demand and petroleum mix. However, this seasonal trend, while compounding the issue, does not entirely elucidate why Washington's gas prices have skyrocketed. Consequently, summer demand cannot be deemed the primary cause of the state's notably elevated gas prices.
Furthermore, the argument that maintenance on the Olympic pipeline is driving these exorbitant gas prices raises questions. The pipeline services both Washington and Oregon, yet the price increase in Oregon does not mirror Washington's situation. Moreover, this routine maintenance has transpired previously without propelling gasoline prices to the highest in the nation.
A substantial counterpoint to those who negate the influence of the CCA is found in the statements of its proponents, such as the campaign group Climate Solutions, which explicitly acknowledged that the CCA would lead to heightened gasoline prices.
In summary, while multiple factors have contributed to the escalating gas prices, they would not have led to the current exorbitant levels without the introduction of the CCA. When it comes to the ignoble distinction of having the nation's highest gas prices, the responsibility ultimately falls on the shoulders of the state's legislature.
Gas station
Gas station

Driving Forces Behind Rising Fuel Prices In Washington

The surge in gas prices in Washington can be attributed to two principal factors, as outlined by McAleenan: supply and demand dynamics and crude oil prices.

Supply And Demand

As the summer season approaches, an influx of travelers hits the road, significantly boosting the demand for gasoline. This heightened demand coincides with the temporary closure of British Petroleum’s Olympic Pipeline for maintenance, severely constraining the state's fuel supply. The Olympic Pipeline plays a pivotal role in transporting gasoline, diesel, and jet fuel from Blaine in Whatcom County to Portland.
The simultaneous upswing in summer travel and pipeline maintenance contributes to the escalating gas prices across the state. Furthermore, Washington's reliance on product imports from California, where prices are relatively high, adds to the overall cost burden.

Crude Oil Prices

The price of crude oil is the primary driver of consumer gasoline prices. Fortunately, Washington currently benefits from a relatively low crude oil cost, which cushions the impact of rising fuel prices. Data from AAA reveals that crude oil is currently trading at around $71 per barrel, a significant drop compared to the $111 per barrel price tag at this time last year.
While supply and demand dynamics and crude oil costs play substantial roles, other factors also contribute to Washington's higher gas prices:

Gas Taxes And Carbon Permits

Washington stands out with a considerably high gas tax compared to other states. As of the latest data, Washington holds the third-highest gas tax nationwide, at $0.49 per gallon, in contrast to the national average of $0.29 per gallon.
The Washington Policy Center and others have cited the Department of Ecology’s Climate Commitment Act, approved in 2021, as a factor in surging gas prices. This initiative aims to cap and reduce carbon dioxide emissions by 95% by 2050.
Washington Senator Mark Mullet, D-Issaquah, has raised concerns about the impact of carbon permits on fuel prices. Carbon permits, auctioned at roughly $56, compared to California's $30 per ton, contribute to the increasing cost of gasoline for Washington residents.

Ongoing Refinery Troubles

Since the onset of March 2019, persistent fires have been plaguing production at the United States' third-largest refinery, situated in proximity to Houston, as well as at a sizable facility in Los Angeles.
These California-based refineries hold substantial sway over gas prices in the Western US and exhibit a remarkable ability to instantaneously impact local pricing. A significant factor is the majority of gasoline produced within the state, geared towards compliance with stringent anti-smog standards.

OPEC Crude Oil Production Cuts – Supply Reduction

Reduced crude oil availability results in an inevitable upswing in prices. OPEC nations have been diligently engaged in curbing their production to the tune of approximately 1.2 million barrels per day.

Dollar Value

Oil contracts are intrinsically tied to the US dollar. Consequently, when the dollar's value diminishes, oil prices ascend. A weakened dollar translates to reduced earnings for oil producers and exporters, which they endeavor to offset through price hikes.
The intricate relationship between oil and the dollar ensures that fluctuations in one invariably influence the value of the other.
In summary, while supply and demand, as well as crude oil prices, have a substantial impact on gas prices, it's vital to consider the role of gas taxes and carbon permits, making Washington's case unique among the states.

The Role Of Legislation In Gas Price Fluctuations

In understanding the complex dynamics of gas prices in Washington, legislation plays a pivotal role. Several legislative actions have had direct and indirect impacts on the state's fuel costs. Here's an overview of the legislation's role:
  • The Climate Commitment Act (CCA) -One of the most significant legislative factors affecting gas prices in Washington is the implementation of the Climate Commitment Act. This legislation, aimed at curbing carbon emissions, imposes charges on businesses based on their CO2 emissions. The cost of these charges often trickles down to consumers, leading to an increase in gas prices. The CCA has been a point of contention, with proponents arguing for its environmental benefits and opponents highlighting its economic burden on consumers.
  • Legislative Response to Increased Gas Prices -In response to the rising gas prices, legislators have introduced bills to address the issue. These bills may include measures to reduce gas taxes or provide subsidies to mitigate the impact on consumers. The effectiveness of these legislative responses in stabilizing gas prices remains a topic of debate and scrutiny.
  • Federal Legislation and Washington's Gas Prices -Federal legislation related to energy policies, taxation, or environmental regulations can also significantly influence gas prices in Washington. Changes in federal laws can impact the state's energy market, affecting supply chains and pricing structures.
  • Regulatory Framework and Market Stability -Legislation often shapes the regulatory framework governing the energy sector. Clear and stable regulations can promote market stability, ensuring a consistent supply of gas at reasonable prices. Conversely, ambiguous or fluctuating regulations might disrupt the market, leading to price volatility.
  • Legislative Initiatives to Promote Renewable Energy -Legislative efforts to transition to renewable energy sources can indirectly impact gas prices. Investments in renewable energy technologies can reduce dependency on fossil fuels, potentially stabilizing gas prices in the long term.

Regional And Global Influences On Washington's Gas Prices

Gas prices in Washington are not solely determined by local factors but are subject to a web of regional and global influences. Understanding these broader factors is crucial in comprehending the volatility of gas prices in the state. Here's an exploration of the regional and global influences:
  • Crude Oil Prices -A primary factor influencing gas prices worldwide is the cost of crude oil. Washington is no exception. Global geopolitical events, production quotas by major oil-producing countries (e.g., OPEC), and supply disruptions can cause fluctuations in crude oil prices. Any significant increase in global crude oil prices tends to elevate gas prices in Washington and elsewhere.
  • Regional Supply and Demand -Regional supply and demand dynamics play a crucial role in Washington's gas prices. Seasonal variations, such as increased demand during the summer travel season, can result in higher prices. Additionally, the state's reliance on its own gasoline production and the capacity of local refineries impact supply, which, in turn, affects prices.
  • Local Refinery Troubles -Since 2019, incidents like fires at key refineries near Houston and Los Angeles have reduced production. Since California-based refineries significantly influence Western US gas prices due to their adherence to strict anti-smog standards, any production setbacks can lead to immediate price impacts in Washington.
  • Impact of Legislation -Legislative decisions in Washington often revolve around environmental commitments, which can affect gas prices. For example, the implementation of the Climate Commitment Act (CCA) and associated carbon pricing can add costs to fuel production, affecting prices at the pump.
  • Currency Exchange Rates -The value of the US dollar has a significant influence on global oil prices. Oil contracts are typically denominated in dollars, so when the dollar weakens, oil prices often rise. As oil producers and exporters earn less with a weaker dollar, they may raise prices to compensate.
  • Energy Policies and Agreements -Agreements and policies between countries, such as international energy trade agreements, can impact oil supply chains and pricing. Changes in such agreements may disrupt supply and have repercussions on gas prices in Washington.
  • Environmental Initiatives -Environmental commitments at the state and federal levels, such as the promotion of renewable energy sources and emissions reduction targets, can influence the energy market. A shift towards cleaner energy sources might indirectly stabilize gas prices over time.

Frequently Asked Questions

What Is The Current Average Gas Price In Washington State, And How Does It Compare To The National Average?

As of June 28, 2023, the average gas price in Washington State is $4.99 per gallon, which is $1.33 higher than the national average of $3.56.

What Legislative Act Has Been Attributed To The Increase In Gas Prices In Washington?

The increase in gas prices is largely attributed to the Climate Commitment Act (CCA), which imposes charges on businesses based on their carbon dioxide emissions.

How Do Proponents And Detractors Of The CCA Differ In Their Explanations For High Gas Prices In Washington?

Proponents argue that corporations are using the CCA as an excuse to increase prices for monopolistic profit, while detractors contend that the CCA forces businesses to pass on the tax to consumers, directly contributing to the high prices.

Why Is The Summer Demand For Gasoline Not The Primary Cause Of The High Gas Prices In Washington?

While increased summer demand does lead to higher gas prices, it alone cannot explain the exceptionally high prices in Washington. The summer demand compounds the issue but does not serve as the primary reason for the state's elevated gas costs.

Why Does Routine Maintenance Of The Olympic Pipeline Not Account For The Significant Gas Price Increase In Washington?

The Olympic Pipeline's routine maintenance, while affecting both Washington and Oregon, has not previously led to such a substantial gas price increase in Washington. This unique circumstance calls into question the various factors contributing to the state's current predicament, with the CCA emerging as a pivotal driving force behind record-high gas prices in the state.

Final Words

The rising gas prices in Washington State are attributed to various factors, including corporate greed, increased summer demand, and pipeline maintenance. The Climate Commitment Act (CCA), which imposes a gasoline emissions tax of 44.3 cents per gallon, is a significant catalyst in influencing these prices.
The unusual maintenance of the Olympic pipeline, which affects both Washington and Oregon, raises further questions. While the CCA's proponents acknowledge that it would lead to higher gas prices, it is the central driving force behind the state's record-high gasoline costs.
Washington, claiming the title of the nation's most expensive gas, has primarily its legislature to acknowledge for this unwanted distinction.
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Emmanuella Shea

Emmanuella Shea

Emmanuella Shea is a distinguished finance and economics expert with over a decade of experience. She holds a Master's degree in Finance and Economics from Harvard University, specializing in financial analysis, investment management, and economic forecasting. Her authoritative insights and trustworthy advice have made her a highly sought-after advisor in the business world. Outside of her professional life, she enjoys exploring diverse cuisines, reading non-fiction literature, and embarking on invigorating hikes. Her passion for insightful analysis and reliable guidance is matched by her dedication to continuous learning and personal growth.
Frazer Pugh

Frazer Pugh

Frazer Pugh is a distinguished expert in finance and business, boasting over 6 years of experience. Holding an MBA in Finance from Stanford University, Frazer's credentials underscore his authority and expertise in the field. With a successful track record in executive roles and as a published author of influential articles on financial strategy, his insights are both deep and practical. Beyond his professional life, Frazer is an avid traveler and culinary enthusiast, drawing inspiration from diverse cultures and cuisines. His commitment in delivering trustworthy analysis and actionable advice reflects his dedication to shaping the world of finance and business, making a significant impact through his work.
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