Gas is expensive in Washington State primarily because of several key factors: a recent increase in the state gas tax, the cap-and-trade program related to carbon emissions, geographic supply constraints, and general inflationary pressures on construction and fuel costs.
State Gas Tax Increase
Washington state increased its gas tax by 6 cents per gallon on July 1, 2025, raising the total state gas tax from 49.4 cents to 55.4 cents per gallon. This tax will also increase annually by 2% for inflation adjustments. The tax hike is intended to fund road projects and bridge maintenance amid a large transportation budget shortfall, projected at $1 billion over two years and $8 billion over six years. Over six years, the tax is expected to generate $1.4 billion specifically from the gas tax itself.
Cap-and-Trade Program Costs
Washington’s Climate Commitment Act establishes a cap-and-trade program that charges carbon emitters for emissions beyond a limit. This program adds costs to fuel producers, which are then passed on to consumers in the form of higher fuel prices. Estimates suggest this adds roughly 40 cents per gallon, though the state disputes the exact figure, saying it may be lower.
Geographic Supply and Refining Constraints
Geographically, Washington sources much of its petroleum from Alaska and Canada. The state's mountain ranges limit crude oil transportation from cheaper southern regions. Additionally, the state is served mainly by five refineries near Puget Sound, and supply disruptions in the broader West Coast region, notably refinery issues in California, have ripple effects causing price rises in Washington.
Inflation and Construction Costs
Inflation has caused construction materials to rise sharply, reducing the purchasing power of transportation funds. This has led to more frequent increases in taxes to keep up with costs, affecting the price drivers pay at the pump.
Comparison to National Average
The average price of regular gas in Washington is around $4.39 per gallon recently, which is more than $1 above the national average of about $3.15 per gallon. Only California and Hawaii have higher gas prices nationally.
In summary, gas is expensive in Washington due to a combination of increased state taxes, environmental taxes from cap-and-trade, geographic supply challenges, refinery disruptions on the West Coast, and inflationary pressure on infrastructure costs. These factors together keep gas prices significantly above the national average for the state.
