The most expensive cities to buy gas in the U.S.

By Matt Woolsey

updated 7:39 p.m. ET Dec. 4, 2007

Drivers in San Francisco enjoy views of the Golden Gate Bridge, with scenic stretches of the Pacific Coast Highway to the south and the rural shoreline to the north.

And they pay for it at the pump.

There, the average cost of a gallon of regular unleaded gasoline reached $3.546 at the end of November, up from $2.524 a year ago.

Things don't look much better in other parts of the state. San Jose, San Diego, Sacramento and Los Angeles posted the country's next-highest per-gallon prices, respectively, according to Gasbuddy.com, a Web site that tracks gas prices nationwide.

Such high prices are not confined to California. Among the country's 40 largest metros, New York City, Buffalo, Seattle, Miami and Chicago rounded out the top 10 priciest places to buy gas.

The surge at the pump is the result of rising crude oil prices, which have grown significantly since 2004, when a barrel sold for $26. On Wednesday, a barrel went for $93.

Still, west coast drivers are hit hardest. Those in cities like San Francisco and Los Angeles pay more at the pump than those in Houston or Dallas, where the average price per gallon Wednesday was $2.90 and $2.923, respectively, due to such factors as fuel taxes, environmental standards and costs of business like regulatory burdens and taxes.

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What’s more, the difference between, say, San Francisco and Houston is more pronounced this time of year since California requires cleaner fuel year round. Texas, like many Southern and Midwestern states, eases up on such requirements during the winter months when consumption slows. California's higher environmental standard increases refining costs, which get passed along to the consumer.

Crude oil's output is heavily influenced by the 12-member Organization of Petroleum Exporting Countries, each of whose yield makes oil such a volatile commodity. For example, in November crude oil approached $100 per barrel due in large part to Mexico cutting a fifth of its crude-oil production. Also affecting prices? The weak U.S. dollar. Because oil is traded internationally in dollars, much of the per barrel price increase over the last few years also has to do with the slipping greenback.

Last week crude hovered around $93 a barrel, and crude futures are starting to dip below $90, as OPEC is expected to increase output, which in turn will lower prices. OPEC restricts output to keep prices high, but it isn't in its interest for prices to skyrocket because this would dent consumption.

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