Patrick DeHaan is a senior petroleum analyst at GasBuddy.com.
For the first half of this year, two states have been battling each other for the dubious crown of most expensive gasoline in the lower 48. Traditionally, the spot is reserved for California, but more recently, Connecticut has raced past the Golden State to take the honor (where this award is stored and who gives it away is beyond me, but for today, I’ll assume that role).
California and Connecticut both have had among the highest gasoline prices (outside Hawaii and Alaska, who’ve earned permanent member status on the list) for much of the first half of this year. However, to understand the trend of who’s new and who’s not new to this list of most expensive gasoline, it’s time to hit the books of GasBuddy historical data.
Going back through GasBuddy’s data, California made the top three list for highest gasoline prices for 363 days in 2009—impressive! For more recent 2010, California made the same list for 362 days. On the other hand, Connecticut appears to be a newcomer to the list. For Connecticut, the numbers aren’t nearly as bad in years past—in 2009, Connecticut spent just 23 days on the top three list, while in 2010, that number jumped to 97 days. [Check out a roundup of political cartoons on energy policy.]
However, we’re in the midst of what may be a permanent or temporary change. Since June 1, California has not appeared even once in the top three list for most expensive gasoline. Connecticut has walloped California by appearing on the list for 47 days during the same time frame, a whopping 96 percent of the time.
Is California being replaced on the list by Connecticut? What’s going on here? Let’s dive into that. According to the American Petroleum Institute, an industry group, gasoline taxes in California average 68.9 cents per gallon this past May. Gasoline taxes in Connecticut averaged 70.3 cents per gallon, the highest in the country. We’re also seeing two different pictures play out in terms of gasoline supply in both of these areas. East Coast refiners have been dogged by issues and low utilization for months while West Coast refineries have been boosting output of seasonal gasoline, resulting in above-average inventories of finished gasoline—two different situations in terms of supply. [See 10 cities that use the most energy per capita.]
This certainly explains quite a lot about price differences, but with taxes remaining higher in Connecticut, will Connecticut remain higher than California? Not unless the supply situation changes in the two areas.
How’s supply making such a big impact? It’s all about supply. If supplies of gasoline are above average, or cushy, there’s less chance of a disruption and less storage available, which puts downward pressure on gasoline prices. If supply is tight (for whatever reason—high demand, low refinery output), there is upward pressure on prices as long as demand persists.
This holds true across much of America. Where there is above-average supply, prices are slightly lower than in communities where the supply picture isn’t as great. So how long will California be absent from the list of most expensive gasoline in the United States? As long as supply remains very healthy. How long will Connecticut retain the crown? As long as supply is lower than average, and as long as Connecticut’s gasoline taxes are highest in the nation, which may not change anytime soon.