December 4, 2014 2:00 PM, EST

Why Oklahoma City Gets $2 Gasoline Before Rest of US

Jazz Bishop/Demotix/Corbis

Of all the filling stations in all the United States, $2 gasoline showed up at Oklahoma City’s first.

Why? Three words: Location, location and taxes. About 70 miles away, in Cushing, Oklahoma, lie the nation’s biggest stockpiles of oil, just a short pipeline ride away from the state’s refiners. Neighboring Texas, home to the most fuel-making capacity in the United States, also feeds the market. And it doesn’t hurt that the state has the fourth-lowest fuel taxes in the country.

“Let’s just say there is no supply issue there,” Patrick DeHaan, a senior petroleum analyst at GasBuddy Organization Inc., said by telephone from Chicago. “You combine that with some of the lowest taxes in the country, and they just had the best opportunity to get under $2.”

An Oncue Express station in Oklahoma City sold gasoline for $1.99 a gallon Dec. 3, becoming the first in the United States. to drop below $2 since July 30, 2010, according to GasBuddy. Two stations nearby quickly lowered their prices, and four in the city were selling under $2 on Dec. 4, the online gasoline price-tracking company said.

The plunge in fuel prices, dragged down by a global glut of oil, comes as policymakers from Michigan to New Jersey face increasing pressure to reform their gasoline taxes. The federal highway and mass transit accounts neared insolvency earlier this year as more fuel-efficient cars and less driving shrank tax-generated funding. The 18.4 cents-a-gallon federal gasoline levy hasn’t been raised since 1993.

Oklahoma’s gasoline taxes were about 35.4 cents a gallon as of Oct. 1. Alaska had the lowest at 30.8 cents a gallon, followed by New Jersey and South Carolina.

As of Dec. 3, Missouri was home to the cheapest gasoline prices, averaging $2.414 a gallon, and Hawaii had the most expensive at $3.831. The national average was $2.728, down almost 97 cents from this year’s peak.

Gasoline stations in the South, where taxes and the costs of producing and delivering gasoline are low, are the ones most likely to fall under $2 a gallon, Andy Lipow, president of Houston-based Lipow Oil Associates, said by telephone Nov. 28.

“We have plenty of gasoline in Houston,” Lipow said. “There are a number of markets here that are likely to see stations at $1.99 a gallon.”