Local News

Reasons for N.C.'s high gas prices not so simple

Posted October 13, 2008 6:23 p.m. EDT
Updated October 14, 2008 9:14 a.m. EDT

— North Carolina has the third highest fuel costs in the nation because the state relies primarily on one pipeline that services at least eight other states, industry experts say.

And while that pipeline, operated by the Colonial Pipeline Co., is back up and running, AAA Carolinas says it still is not carrying enough gasoline to meet consumer demand. Fifty-five oil wells were damaged because of Hurricane Ike, and a large ExxonMobil refinery in Beaumont, Texas, is still out of order.

Tom Crosby, AAA Carolinas spokesman, said the state, unlike many others, has few alternative fuel sources. Gasoline can come in through the port at Wilmington, he said, but that is not a major source.

Panic pumping before Hurricane Ike pounded the Texas coast last month and retailers' anxiety that they will run out of gas too soon are also factors that are driving prices high.

Gary Harris, executive director of the North Carolina Petroleum Marketers Association, said North Carolina drivers seemed to panic more than those in other states, but he could not say why.

AAA Carolinas says the average price of a gallon of unleaded gas is $3.50 per gallon in North Carolina (the average in Raleigh is $3.62), 29 cents above the national average. The only states averaging more per gallon are Hawaii at $3.98 and Alaska at $4.08.

Some also point to North Carolina's gas taxes, the sixth highest gas taxes in the country and the highest in the Southeast. However, North Carolina State University Economist Mike Walden says high gas taxes may be helping keep our local property taxes lower.

Most states rely on a mix of local and state taxes to pay for roads, but North Carolina finances 90 percent from the state gas tax.

Prices in the Raleigh metropolitan area could be higher, AAA Carolina added, because the area could have a larger number of independent retailers who are still recovering gas supplies.

Both groups say they believe the statewide average should continue to drop each day as the state's inventory continues to build over the next few weeks.