Attorney general's gas-price study: highest in Bellingham, lowest in Ellensburg

The most expensive city in the state to buy a gallon of gas is Bellingham, followed by Bellevue. Drivers can get the cheapest gas in Ellensburg.

In all, gas prices are cheaper in Eastern Washington than Western Washington.

That's part of a new 74-page report on a state investigation into factors that influence gas prices.

State Attorney General Rob McKenna announced his investigation into the gasoline market in April in response to concerns by consumers about why gas prices were consistently higher in some areas of the state.

"People across the state have been frustrated with increasing gas prices — as are we," McKenna said. "This fact-finding report helps us see how Washington compares with other states, how our cities and counties compare with one another, where our gas supply comes from and what goes into the price of a gallon of gas."

The last comprehensive study on Washington gas prices was published in July 1991. That study found significant differences in gasoline prices from city to city in Washington.

The report, by University of Washington economist Keith Leffler, found crude-oil prices explained much of the high gas prices. Crude-oil costs increased by more than 76 cents per gallon from December 2003 to May 2007. Oil prices reached an all-time high on July 31 of more than $78 a barrel.

Refinery costs have also increased, Leffler found. The difference between the refinery price of gasoline and the cost of crude oil, called the "refining margin," increased by 93 cents per gallon from December 2003 to May 2007, a 413 percent increase. Leffler said the capacity of Washington's oil refineries is at its historical peak.

The report found that, in July, the average price of a gallon of gas was $3.07. Of that, $1.52 went to the cost of crude oil, 67 cents to refining, 36 cents to the state gas tax, 26 cents to the sales margin (the difference between the wholesale price and average retail price, minus transportation costs), 18 cents to the federal tax and 7 cents for shipping costs.

As for the statewide differences, the 1991 study found prices were lower in Seattle than in Eastern Washington. That is no longer the case, with the highest prices today in Bellingham, where a gallon of gas averaged $3.06 this year. The second-highest city was Bellevue, with an average of $3.02 a gallon. Seattle averaged $2.98.

Leffler said prices in Bellingham were relatively low when the Olympic pipeline closed after a 1999 explosion — as much as 23 cents a gallon lower than Seattle. But since the pipeline reopened, prices have skyrocketed there.

Another major part of the price of a gallon of gas is the 36-cent state gas tax, which, combined with the federal tax, makes it the highest in the nation. Since 2003, the gas tax has increased by 13 cents a gallon.

The state ranks 16th in the nation for the price of a gallon of gasoline, Leffler found. The highest prices are in Hawaii, the lowest, Ohio. The study found the state consumes 178,000 barrels of gasoline each day.

Other findings in the study:

• Looking at gas prices by county, the lowest price this year was in Spokane County, where gasoline averaged $2.81 a gallon. The highest was in San Juan County, at $3.45 a gallon. The 10 counties with the lowest average gas prices are all in Eastern Washington.

• Gas consumption rates in the state have remained stable since 2000.

The second phase of the gasoline study, expected to be released sometime next year, will look at the differences in the wholesale cost of gasoline from different supply sources, transportation costs to the terminals, the costs of retailing and how competition affects price. This study will try to explain why Bellingham's gas prices are so much higher than the rest of the state.

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com