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How Region Affects Gasoline Prices
The price of gasoline at the local level can also be affected by the immediate, short-term availability of oil and gasoline.
The Phoenix area is served by Western refineries via pipeline. Several years ago, an issue forced the pipeline to close for several weeks, constricting the supply of gasoline to the area.
California gasoline cannot be sold in Arizona because of different local--or "boutique"--fuel specifications.
Boutique fuels are specially formulated to meet the various requirements of local and state air quality laws. There are currently more than 200 boutique fuels in the U.S. In this case, gasoline that met Arizona requirements had to be trucked in from other parts of the U.S. at great expense, which drove up the price of gasoline in Phoenix.
Additionally, local, state and federal taxes, which account for almost one-third of the price of gasoline, have one of the biggest impacts on regional price variations. State sales taxes typically are a percentage of the pre-tax gasoline price instead of a flat per-gallon fee, which means that as gasoline prices rise, taxes also rise.
But, they are higher in other parts of the world: in Canada, for example, taxes comprise, on average, one-third of the price of gasoline at the pump. In the UK, that figure rises to about 75%.