Reply #56: Two, big factors for different pricing, State Gasoline taxes and Shipping costs [View All]

[happyslug]

The big difference is the State Gasoline tax rate (Please note the Federal charges 18.4 cents per gallon over and above the number below):

Ohio is 26 cents a Gallon.

Michigan is only 19 cents a gallon.

Pennsylvania is 31.1 cents per gallon (We have had $3.09 a gallon since the beginning of December 2010).

http://www.gaspricewatch.com/usgastaxes.asp

On the other hand Shipping costs are also a HUGE factor for most fuel in the Central United States comes up the Mississippi River by Barge. The further away from New Orleans, the higher the cost to transport the fuel.

Michigan may get some fuel via the St Lawrence in the summer, but most is shipped in from the Ohio River by truck.

Now some of the fuel goes north via pipeline, which is as cheap as Barges but only if 100% used, thus all are maxed out at present and any "excess" is shipped by Barge. Looking at the map below you will see many gasoline pipelines start on the Mississippi or Ohio Rivers and goes into the Mid-West including Ohio and Michigan. Thus the gasoline is shipped by barge up both rivers and then by pipeline.

Here is a pipeline map:


The vast shipment of gasoline, is overwhelmingly from the Gulf coast to other areas of the Country:
http://tonto.eia.doe.gov/dnav/pet/PET_MOVE_NETR_A_EPM0F_TNS_MBBL_M.htm

All of these transportation method uses fuel, thus the further from the source of oil (New Orleans) the higher the costs of the fuel. This is minor compared to the differences in state gasoline tax rates but significant.

Navigable Water ways by the Army Corp of Engineers is on the Wikipedia web site:
http://en.wikipedia.org/wiki/United_States_Army_Corps_of_Engineers

It is just to large to put on this site, but when viewed clearly shows the Navigable waters of the US. all of which can carry barges full of Gasoline. On the map the orange lines are navigable waterways deeper then 14 feet, the Green Lines are navigable waterways less then 14 feet. These two colors are the most useful on the map for it show where barges can go,

The red lines are division of Corp (Not useful except to know who to complain to), Red dash lines are further divisions within a Division of the Corp (Again NOT useful except who to complain to).

Side note: the above pipeline map shows a dense set of gasoline pipelines throughout the midwest (Including Ohio and Michigan). The South has two pipelines in comparison. On the other hand the South has much more navigable waters to ship gasoline on then does the Mid West (But that in compensated by the Great Lakes, which also permits extensive barge shipments, but very little fuel goes via the Great Lakes, even Alberta ships is Crude south via Pipeline via the plains states and the Missouri River NOT the Great Lakes).

As a whole the Mid West has more fuel delivery options then the South, but at higher price point and this adds to the base price of gasoline in the Mid-West, but also prohibits a local price spike like the South Suffered from in the Fall and Winter of 2008 as the rest of the Nation show substantial drop in Gasoline prices (The pipeline was down and the only way to get gasoline in was by truck).

Careful review of the Corp's map and the pipeline map above you quickly see why the Mid-West has the vast Majority of Pipelines and the south very few, the South has a lot more Navigable Waters to transport gasoline by barge, through combined the Mid-West still has a much thicker and denser distribution system in place for Gasoline and other oil Products.