No seriously, why are gas prices in Utah still higher than the national average?

No seriously, why are gas prices in Utah still higher than the national average?

NORTH SALT LAKE, Utah — It’s the most common question KSL gets from viewers: Why are gas prices in Utah so much higher than in other parts of the country?

The questions are not without reason. While the rest of the country has seen a drastic respite in gas prices, Utah is significantly lagging behind.

According to AAA, the national average for a gallon of gasoline is $3,681. Utah is paying about 60 cents more, averaging $4,229 per gallon.

“He’s going to bounce back,” said St. George resident Ken Boyle. “We’ll catch up with time.”

Waiting for gas prices to drop in Utah comes with some frustration.

“What is?” Boyle questioned, “Is it a price increase? Why are we so slow? It’s a sentiment heard in dozens of emails, calls and social media posts to KSL researchers. Some point to “every major refinery in the Salt Lake Valley,” suggesting that our gas production capabilities shouldn’t stop us from lowering prices.

An image of Utah’s oil production

Utah has a strong oil production industry. According to data from the US Energy Information Association, Utah ranked 10th in the nation for oil production in 2020.

Utah’s five oil refineries process about 204,000 barrels per day, more than enough to cover the 121,000 barrels Utahns consume daily. Most of the gasoline consumed in Utah is created in Utah refineries.

Utah produces so much gasoline that we find refineries boasting of supplying gasoline to several western states, including Idaho, Nevada, Wyoming, Washington, and Oregon.

Utah also has oil pipelines, three major ones that stretch over a thousand miles. They bring refined gas products from the Sinclair refinery in Wyoming to the Wasatch Front and transport refined products from the North Salt Lake refineries to other states such as Idaho and Nevada.

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The Utah Petroleum Association said most of the motor fuel used by Utahns is produced at those North Salt Lake refineries.

Not really a lot of gas produced

Looking at the numbers, it seems obvious that Utah would be self-sufficient in gasoline and therefore have lower prices.

It is not so simple.

Get Gephardt spoke with Tom Holst, a senior energy analyst at the Kem Gardner Policy Institute. Holst worked in the oil industry for decades all over the world. He said that while Utah seems to produce a lot, it really isn’t.

“On the Gulf Coast, they collectively process 5 million barrels a day,” Holst explained.

That’s 25 times more than Utah.

The massive supply from the Gulf Coast, compared to Utah and how many states it supplies, is one of the reasons we pay more for gas.

Free market at work

Holst says there are other contributing factors: State gas taxes in Utah are 31.9 cents per gallon, slightly higher than the national average of 28.85 cents per gallon. We have fewer pipelines, which means more expensive trucks are used to deliver crude oil and refined products to end users.

And yes, politics and earnings can play a role too.

In a free market system, oil companies are free to sell to whoever pays the highest price.

“Refineries in North Salt Lake have made significant investments and their refined products will fetch the highest price they can,” Holst said.

Despite the many obstacles facing the industry, such as labor shortages, sanctions on Russian products and fewer oil leases available to buy, oil companies are posting record profits.

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According to the US House Committee on Energy and Commerce, Chevron reported profit of $11.6 billion last quarter. Shell entered with 11.47 billion dollars. BP earned $8.45 billion and Exxon reported profit of $17.9 billion, the highest reported quarterly profit of any oil company in history.

The Utah Petroleum Association defended the free-market economics of oil companies, noting that only “2.4%” of those profits go to the companies’ “corporate officers.” This equates to $429.6 million in the Exxon case.

Through a “Utah Gas Prices Explained” brochure, UPA said most of those profits go to “millions of Americans, through retirement funds like 401(K)s and public and private pension funds.” “. These are paid to shareholders through dividends on their shares.

UPA noted that “refineries own less than 5% of the 145,000 retail stations nationwide.” A spokesperson told Get Gephardt: “UPA does not represent retail service stations and that is where the rubber meets the road here.”

So we turned to Dave Davis, president of the Utah Food Industry Association, which represents retail gas stations, to find out: Is robbery happening at the real gas pump?

Davis indicated that it’s likely not the retailers that are causing the pain at the pump.

“On a retail level, we are not seeing a significant increase in gross fuel margin,” Davis explained.

Turning to alternative fuels

Although the pain at the pump continues, Holst was optimistic that good things will come of it, specifically that Utahns will become less dependent on oil and gasoline for transportation.

“Electric vehicles are becoming mainstream,” Holst said. “The adoption rate of electric vehicles by Utahns is higher than the national average.”

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He is right. The US Department of Energy showed 16,480 registered electric vehicles for Utahns at the end of 2021, or five per 1,000 people. The national average for electric vehicle adoption is three per 1,000 people.

Utah gas prices have fallen $1,041 per gallon from the average all-time high of $5,262 on July 1, 2022. While prices continue to fall here, national prices have begun to rise again due to fluctuating gas prices. Raw oil.

Demands on gasoline supply as we head into the winter months will play a significant role in determining whether gasoline prices in Utah continue to trend downward.

Have you experienced something that you think is not right? KSL researchers want to help. Send your suggestion to [email protected] or 385-707-6153 so we can work for you.

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About the Author: Pierre Cohen

A person who has expertise in politics and writes articles to fill his spare time as a hobby.