State second only to Hawaii when it comes to the price of gasoline

July 22, 2011 12:00 am • Last Updated: July 22, 2011 3:10 pm

By By PATRICIA DADDONA Day Staff Writer

Connecticut passed California Thursday as the priciest contiguous state, on average, for regular gasoline in the continental U.S., at $4.03 a gallon.

The New London-Norwich region's average price registered $3.99 a gallon, but the Bridgeport area hit nearly $4.12 a gallon, according to AAA.

AAA spokesman Jim MacPherson and Patrick DeHaan, a senior petroleum analyst with online gas price tracker GasBuddy.com, said Connecticut prices hadn't topped California's in recent memory.

Hawaii's price remains the highest in the nation, at nearly $4.07 a gallon, but Alaska's price, which is typically higher than Connecticut's, is now about the same.

"Just like Alaska and Hawaii are among the highest, California is typically right there and for the first time in recent memory Connecticut is perched at the top," said DeHaan. "It's pretty rare to see California not among the top."

Issues relating to supply are part of the reason Connecticut's price has crept up, analysts say, although several agree that California's relatively cheap price of $3.81 a gallon on average is what's most unusual.

Low demand due to a slow economy there is the reason, and the price of wholesale and retail gasoline reflects that, said Tom Kloza, chief oil analyst with the Oil Price Information Service. OPIS, based in Gaithersburg, Md., Wall, N.J., and Singapore, covers petroleum pricing globally.

"The price of wholesale gasoline in California is actually the cheapest in the country, which is very unusual," Kloza said.

"That's one part of the country where, if you had demand statistics that are regional and could look at the Pacific Northwest, that is the economy that is still struggling the most, and where people living paycheck to paycheck are probably using less fuel."

Thursday also was the anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has recommended reforms of the commodity derivatives markets to promote stability and prevent excessive speculation. While analysts cited causes other than speculation in driving Connecticut prices up, U.S. Rep. Joe Courtney, D-2nd District, said, "any relief would be welcome."

Courtney testified Thursday at the Agriculture Committee's public hearing on "Derivatives Reform: The View from Main Street." Connecticut has some state-specific issues, he said, but to the extent Dodd-Frank were implemented it would provide relief nationally, not just to Connecticut.

"On the Main Street I come from, people are still enraged over the prices of gas that they don't believe are valid," Courtney said in a phone interview after the hearing.

In terms of supply, Kloza said Connecticut uses a special type of reformulated gasoline in the summer months that foreign countries have had trouble manufacturing this summer. The reformulated gasoline is tricky to make, said Kloza.

"The good news is we only have about 50 more days to adhere to that specification," he said.

DeHaan adds that refineries on the East Coast aren't producing as much gasoline as they are in other markets. The average utilization rate, or percentage of capacity, being used at refineries on the East Coast is only in the 60s, compared with 80 percent as the national average, DeHaan said.

"It's not necessarily pushing up prices, but it's not helping them go down like it is in California," DeHaan said.

Connecticut also has high taxes, with a 25-cent excise tax and 24 cents more in other state taxes per gallon, according to the Independent Connecticut Petroleum Association.

The International Energy Agency recently agreed to release 30 million barrels of crude oil from reserves, but the market has already reflected that news when the price dropped from around $100 to $89 a barrel in late June, Kloza said. But both Kloza and DeHaan say even when the reserve fuel hits the market, prices won't necessarily drop at the pump.

In fact, wholesale prices in New York, which is the market that dictates prices in the Northeast, have been the highest in the country through most of July, Kloza said.

"The farther you go east, the higher the wholesale prices," he said.

A proposed rule to implement Dodd-Frank should be presented to Congress by late fall, Courtney said.

p.daddona@theday.com