Top 10 States for Highest Gas Prices

Based on the most recent official data from the federal Energy Information Administration, these are the top 10 states with the highest gas prices. (The states are sorted highest to lowest, based on an average of their monthly gas prices from January 2008 to July 2008.)
Alaska
Hawaii
California
Oregon
Vermont
Connecticut
Washington
Maine
West Virginia
New Mexico
When summer ends, we look forward to falling leaves and falling gas prices. The summer driving season has traditionally been when we see the highest prices at the pump, and gas prices usually get better at the start of the school year.
Gas Prices Are Dropping.Normally, as Labor Day passes, travel diminishes and gasoline prices fall, and travel has already been slower than last year due to high gas prices. Despite supply problems due to the recent hurricanes, we are already starting to see a price drop this year. However, industry experts say that continued worldwide strong demand, and overall level-to-decreased production will cause long-term increases in the price of gasoline. The price of crude oil hit a record high of almost $150 per barrel this past July, and while prices have eased a bit, no one is expecting a long-term return to the prices of below $55 per barrel that we saw just three years ago without significant demand changes.
Should We Lower Gas Taxes?Federal, State, and local taxes were traditionally a large component of the retail price of gasoline. However, taxes currently account for only about 15% of the cost of a gallon of gasoline. Federal excise taxes have held steady at 18.4¢ per gallon since October of 1997, and basic state taxes average about 21¢ per gallon. Unfortunately, at around 40¢ a gallon, lowering gas taxes would not significantly lower the price of gas. In addition, since gas taxes are mostly used to fund road maintenance and public transportation, the reduced tax revenue would have to be raised in other ways. Cities, states, and the federal government would raise the overall tax burden even for those who don't drive. If you still think we're paying too much for gas, consider this: Europeans are paying an average price of around $7.50 per gallon of gasoline, a large part of which is tax.
Some States Add More Taxes.The 21¢ per gallon is an average figure, meaning some states are adding more tax, and others are adding less. Some states, such as Hawaii, which are far from the refineries, pay more due to additional transportation cost. And residents of California are saddled with expensive gasoline because the state operates its own reformulated gasoline program with more stringent requirements than federally-mandated gasoline. California prices are historically more variable than others because there are relatively few supply sources for its unique blend of gasoline.
Will Gas Prices Cause a Permanent Shift?Interestingly, gas prices rose to a point this year that caused Americans to change their driving habits. There has been an accelerated demand for fuel-efficient cars, such as hybrids and economy cars. Nearly all carmakers have hybrids either in production or planned for future release. It remains to be seen, however, if the recent drop in gas prices will cause a return to earlier levels of travel, or if the trend toward less travel will be permanent. Historically, cheaper gas has led to more driving, but switching to public transportation, carpooling, and cars with better gas mileage may counteract this tendency.