Gas prices expected to head south after Labor Day

Man holding gas pump like pistol against his headThere's some good news for people who wait to vacation until after Labor Day weekend: at least one industry expert expects gasoline prices to go down. Tom Klonza of the Oil Price Information Service told USA Today that he believes that prices at the pump could drop by as much as 15 cents a gallon.

Thank falling crude oil prices, climbing inventories, and a continued slack in demand by the driving public for the projected declines. Unleaded gasoline futures for September delivery have dropped steadily over this month, too, down to $1.88 today, another harbinger of declining fuel costs.

Lest we get overconfident, though, the U.S. Energy Information Administration's Short-term energy outlook is projecting that regular gas will average $2.77 a gallon in the second half of this year, up a penny from the first half of 2010.

According to AAA's Daily Fuel Gauge Report, the current national average for regular gas is $2.708. A year ago it was $2.627, so we're up about eight cents year-over-year. The highest price on record was $4.114 in July of 2008. Luckily, we are nowhere near those levels now. Here are the states that currently have the most and the least expensive gas at the moment:

Most expensive for a gallon of regular:
  1. Alaska, $3.538
  2. Hawaii, $3.480
  3. California, $3.140
  4. Washington, $3.102
  5. Oregon $3.017
Least expensive:
  1. South Carolina, $2.480
  2. Missouri, $2.499
  3. Arkansas, $2.521
  4. Mississippi, $2.524
  5. Tennessee, $2.537
How to account for the differences in prices? Tax has a role to play, but not a one-to-one correlation. Here are the states where residents pay the most tax for their gasoline (The federal part of this tax is $.184):

Highest gasoline taxes:
  1. California, $.674
  2. Hawaii, $.634
  3. New York, $.632
  4. Connecticut, $.609
  5. Illinois, $.580

Lowest gas tax:
  1. Alaska, $.264
  2. Wyoming, $.324
  3. New Jersey, $.329
  4. South Carolina, $.352
  5. Oklahoma, $.354

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