Why are gas prices so low in Colorado?

COLORADO, USA — Why are gas prices so low? The reason is simpler than you think.

Nationally, gas prices are falling fast, dipping below $3.00 for the first time in four years, but that trend starts with global supply.

OPEC+ countries, an alliance of oil-producing nations, are pumping out large amounts of crude oil, which is lowering the price of benchmarks like West Texas Intermediate (WTI), according to Skyler McKinley, the regional director of public affairs for AAA. He said that WTI is currently trading well below $60 per barrel, which is a level that drags down gas prices across the United States.

At the same time, demand for gas is naturally down. McKinley said not many people take long road trips in December, and winter typically brings one of the lowest travel periods of the year. Low demand combined with high supply equals cheaper fuel.

“People drive less in the winter, decreasing demand. Also, winter-blend gasoline is generally less expensive than summertime fuel,” said Angie Binder with the Colorado Petroleum Association.

But Colorado prices are dropping even further than the national average. Currently, Colorado is sitting at an average of $2.52 per gallon compared to $2.94 per gallon nationally, according to AAA. That’s largely due to the Suncor refinery in Commerce City. The refinery draws from lower-cost Colorado crude and cheaper Canadian crude, which gives it even lower input costs than typical refineries buying from WTI. 

“Those savings are passed on to the folks who buy refined petroleum products and then passed on to the consumer at the pump,” McKinley said.

When that refinery is running smoothly, Colorado tends to rank below the national average for fuel prices. When it goes offline, like it did a few years ago, prices spike. But for now, it’s operating normally, and consumers are benefitting.

But not every place in Colorado is reaping the benefits of cheaper gas as Colorado’s cheapest prices often come down to hyperlocal competition, according to McKinley.

Gas itself isn’t a big moneymaker for gas stations. Instead, stations rely on profits from convenience store items like drinks, snacks, merchandise and loyalty programs. So when stations drop their fuel prices, it’s often a strategic move to draw customers inside so it happens more in the Denver metro area and places with higher populations compared to places in the mountains and rural areas.

As of Thursday, according to AAA, the counties that have the best average prices for gas are Weld, Adams, Arapahoe, Denver, Jefferson, Clear Creek, Broomfield, El Paso, Pueblo and Saguache, which all fall under Colorado’s average for gas prices. The counties with the worst gas prices are Philips, Moffat, Rio Blanco, Routt, Grand, Eagle, Pitkin, Lake, Park, Chaffee, Gunnison and San Miguel, which all have averages above $3.00.