What are PADD regions, and why do they matter for gas prices?
What they are
The Petroleum Administration for Defense Districts were created during World War II to allocate fuel during wartime rationing. They have outlasted their original purpose and remain the standard framework for organizing U.S. petroleum data. The U.S. Energy Information Administration uses them to publish refining, supply, and pricing statistics.
| PADD | Region | States |
|---|---|---|
| 1 | East Coast | ME, NH, VT, MA, RI, CT, NY, NJ, PA, DE, MD, DC, VA, NC, SC, GA, FL, WV |
| 2 | Midwest | IL, IN, IA, KS, KY, MI, MN, MO, NE, ND, OH, OK, SD, TN, WI |
| 3 | Gulf Coast | AL, AR, LA, MS, NM, TX |
| 4 | Rocky Mountain | CO, ID, MT, UT, WY |
| 5 | West Coast | AK, AZ, CA, HI, NV, OR, WA |
Why they matter for gas prices
PADD regions are not just bookkeeping categories. They reflect the actual structure of U.S. petroleum supply, including refinery locations, pipeline networks, and import/export terminals. Three of the five regions (PADDs 1, 2, 3) are tightly interconnected by pipelines and by the Colonial and Plantation pipelines that run from Gulf Coast refineries up the East Coast. PADD 5 (the West Coast) is essentially isolated from the others by the Rocky Mountains. PADD 4 (the Rocky Mountain interior) has limited connections.
Our regression analysis shows that gasoline prices in PADDs 1, 2, and 3 are statistically indistinguishable from one another after controlling for taxes and other factors. PADD 4 carries about an 18-cent premium and PADD 5 about a 59-cent premium. The premiums reflect the limited substitutability of supply: when refineries in well-connected regions go offline, replacement supply arrives quickly by pipeline; in the isolated regions, replacement is slower and more expensive.
The West Coast (PADD 5) story
PADD 5 has no pipeline connection to the rest of the country except for one Arizona link. When a West Coast refinery goes offline, the only replacement supply arrives by marine tanker, which takes weeks rather than days and costs more. This is the structural reason the West Coast carries a persistent gasoline-price premium.
Our year-by-year analysis shows the West Coast premium was modest from 2017 through 2021 (between $0.20 and $0.44 per gallon over the East Coast). It widened sharply starting in 2022, reaching about $0.91 per gallon by 2026. Three things changed in that window:
- Washington's Climate Commitment Act and Clean Fuel Standard took effect January 1, 2023
- California's cap-and-trade allowance prices roughly doubled between 2021 and 2023
- West Coast refining capacity contracted (Marathon Martinez, Phillips 66 Rodeo, and Phillips 66 Los Angeles refineries closed or converted)
The widening of the PADD 5 premium is mostly recent and tied to identifiable policy and supply events, not to long-standing geography. (See our Washington page for the cleanest single-state analysis of this dynamic.)
The Rocky Mountain (PADD 4) story
PADD 4 covers the interior Mountain West (Colorado, Idaho, Montana, Utah, Wyoming). The region has its own refining base supplied by local Rocky Mountain crude production, and it has limited pipeline access to both the Midwest (via the Express, Platte, and Frontier pipelines) and the West Coast. Prices run slightly above the national average because the region's refining capacity is small relative to demand and inter-pipeline arbitrage is limited.
How they interact with state policy
The PADD-region effects in our regression are independent of state-level taxes, fuel blends, and carbon programs, which are absorbed by separate variables. A state's PADD region reflects where its gasoline physically comes from and what it costs to deliver. State policy adds (or subtracts) costs on top of the PADD baseline.
FAQ
Why are there only five PADDs?
The PADD structure was set during World War II to manage petroleum rationing. The original divisions reflected wartime supply patterns and have not been substantially redrawn since. The boundaries don't always match modern petroleum supply patterns perfectly (Florida is in PADD 1 but is supplied entirely by Gulf Coast tankers, for example), but the EIA continues to use them for historical continuity.
Does PADD 1 include Florida?
Yes. PADD 1 covers the entire East Coast from Maine to Florida, including all of the Mid-Atlantic and Southeast. The District of Columbia is also included. West Virginia is in PADD 1 despite being a landlocked state, for historical reasons.
Why is Arizona in PADD 5 when it borders PADD 3?
Arizona has historical ties to West Coast refining markets, particularly Los Angeles, and was assigned to PADD 5 in 1942. Today, Arizona is partially supplied by the El Paso pipeline from PADD 3 (Texas), making it the only PADD 5 state with significant supply alternatives. Arizona's gas prices reflect this — they are noticeably lower than other PADD 5 states.
Could the West Coast be connected to PADD 3 by pipeline?
In principle yes, but no such pipeline currently exists. The Rocky Mountains have historically made trans-mountain pipeline construction expensive, and West Coast states (particularly California) have generally opposed new pipeline infrastructure on environmental grounds. The Arizona-PADD 3 connection via the El Paso pipeline is the only existing east-to-west petroleum-product pipeline.
Sources
- U.S. Energy Information Administration, Petroleum Administration for Defense Districts, eia.gov/petroleum/marketing/monthly.
- U.S. Energy Information Administration, Refinery Capacity Report, June 2025.
- Institute for Energy Research, "California's Refinery Situation Looks Like It Will Get Worse," April 25, 2025.