From the DOE
http://www.eia.doe.gov/emeu/plugs/plprimer.html

Finally, gasoline prices may also differ from one locale to another, for a variety of reasons. Differences in State and local tax rates, discussed above, are one reason. Another is proximity of supply: how far an area is from refineries. Prices tend to rise with distance from the Gulf Coast, which is the source of nearly one-half the gasoline produced in the United States. The extent of local market competition can make a difference as well, with prices likely to be lower when many competing suppliers are concentrated in an area.

Environmental requirements can also cause regional variations in gas prices. Certain State and Federal laws designed to reduce air pollution require that gasoline sold in some areas of the country be chemically modified to reduce motor vehicle emissions that contribute to carbon monoxide, smog, or toxic air pollutants. These special requirements typically raise the cost of making the gasoline. The pump price of the "reformulated" gasoline required in some cities runs about 3 cents per gallon higher than that of conventional gas, and about 5 cents per gallon higher in California. The price difference is greater in California because its standards are stricter than the Federal standards that apply elsewhere. Gas prices in California also tend to be more volatile than in other States because in-State refineries are hard pressed to meet demand and there are few refineries outside the State geared to provide California's unique blend of gas. Demand surges or supply shortfalls therefore usually tighten supplies and drive up prices.