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The Puzzle of the Pump

Why is there such a range of gasoline pricing across New England?

Several weeks ago during a visit to Acadia National Park on Mount Desert Island, this reporter couldn’t help but notice the price of gasoline.

It averaged about $3.75. Not exactly cheap, but considering it was in northern Maine -- a tourist destination and an island -- the price for liquid fossil fuel was certainly less expensive than expected. The joking began: “Let’s drive up here next time we need gas.” “Let’s ditch the duffel bags for jerry cans, fill them up with gas and bring it home.”

Pathetic jokes to be sure, but they prompted The Hub to try and solve the puzzle of the pump. In many parts of The Nutmeg State, gas prices still average above $4 a gallon. In fact, according to the AAA auto club, after Hawaii, Connecticut has the second highest regular gas in the country. The national average is $3.66 a gallon.

It’s said that the price of gasoline is linked to the price of crude oil.

The nation uses about 20 million barrels of oil products per day, according to the U.S. Department of Energy. Motor gasoline uses about half of that, or 10 million barrels. In other words, about 178 million gallons of gasoline are consumed daily, according to DOE.

The other piece of the puzzle is crude oil prices. Economists say that when the price of crude oil rises, the price of gas rises. But the price of oil is the lowest it has been since September; it closed at $79.30 a barrel on Tuesday. Gas prices have yet to drop.

Back in May, Attorney General George Jepsen told Patch, at a DTC fundraiser in Wilton, that his office is looking into price zones and regional pricing. At the time, Jepsen said gasoline prices were “driven overwhelmingly by futures prices.”

And while the Attorney General's office has yet to form an official task force, he is clearly aware of the issue.

State governments have limited power to effect fundamental change in the international energy market, according to the AG's office. It can regulate some conduct and disclosures by fuel oil companies, propane companies and gasoline retailers, but can't control prices, which are a foundation of myriad market conditions, futures trading on the commodities exchanges and street pricing at the retail level.

"Except in very limited circumstances, gasoline prices are not regulated by government, especially at the local level," Attorney General George Jepsen said. "Much of what pushes up gasoline prices initially occurs at the national level, and needs a national solution so that costs are not artificially inflated to begin with. In terms of declining wholesale gas prices, there is no one answer or excuse for every gasoline retailer. Even when prices fall a little, consumers should continue to shop aggressively for the best price, which is critical to maintaining a competitive market and preventing excess profits."

According to the most recent Lundberg Survey, the national average for gasoline fell 1.33 cents last month. The survey also said that gas prices fell more than 38 cents since reaching close to $4 in early May. Yet much of Connecticut has yet to experience the price decline.

“Further dramatic drops probably aren’t in the cards,” publisher Trilby Lundberg said in a press release. Mid-grades' average fell two cents to $3.76 a gallon, while premium pricing rose 8 cents to $3.98, according to surveys taken at 2,500 stations on Friday.

The Lundberg survey calculates average price at thousands of stations across the country. 

The survey found Chicago had the highest gas prices, at $4.03 a gallon. The lowest price was in Phoenix at $3.30. Prices in other cities include: Boston- $3.72, Philadelphia- $3.66, Atlanta- $3.58, Memphis- $3.42, St. Louis- $3.57, Denver-$3.42 and San Diego-$3.72.

A quick tour of Fairfield County shows a range of prices, albeit not a big one.

Around exit 63 on the Merritt Parkway, near Stratford, the Mobil station was selling regular gas for $4.05 a gallon. But, in Danbury, there’s a Citgo station that routinely sells regular gas for less than $4 a gallon.

On Aug. 10, Shelton prices were between $3.99 and $4.07 per gallon, according to www.fuelmeup.com. Trumbull had prices ranging between $3.99 and $4.41 per gallon; in Greenwich, it went from $4.19 to $4.30 per gallon. In Westport, prices were between $4.05 and $4.24 per gallon and, in Darien, they were between $4.09 and $4.39 per gallon.

When demand is high, prices rise. But demand isn’t high now, even though its summer.

“As a result of the economy, with fewer people taking driving vacations and the unemployed having no jobs to drive to and from each day, the demand for gas has decreased,” Lundberg also stated.

Huh? If crude oil prices are down and demand is down…

And so at the end of this exercise, The Hub feels this: questions asked but unanswered.

Jerry McTigue August 14, 2011 at 03:51 PM
What we need is more deregulation of the oil industry. Why should gas stations be stuck charging only $4 a gallon when they could easily get $5 or $6 a gallon if they got the government off their backs? This would create more jobs, too, like cashiers and accountants to handle the additional proceeds. Good move, Attorney General Jepson, disclaiming responsibility and kicking the ball back to the feds. That way gas retailers can breathe easier knowing the state isn't on their case and fix prices among themselves as they see fit. After all, corporations are people, too, aren't they?, and  have as much a right to free market collusion as the banks, drug companies and insurance providers. So let's deregulate, pay more and be proud we're doing our fair share to help to spur the economy!

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