‘Gas zones’ to blame for high pump prices, legislator says
Gasoline is more expensive in Westport than it is in, say, Naugatuck. Nobody disputes that.
Why a gallon of gas in Fairfield County is more expensive than the same gallon of gas elsewhere in Connecticut — and what to do about it — is a question of some debate.
If you listen to Sen. Tony Hwang, R-Fairfield, it’s because distributors are charging retailers more in places like Westport, Stamford, Darien, Fairfield and New Canaan than they are outside the boundaries of Fairfield County.
Those retailers have to pass that increase along to customers in order to turn a profit, Hwang argues.
He’s proposed a bill that would prohibit the practice of what he called zone pricing for gasoline.
Distributors counter that there is no zone pricing for gasoline, that it’s market forces, and market forces alone, that dictate the cost of a gallon of gas.
Hwang doesn’t believe it. The overall cost of gasoline may be tied to the price of a barrel of oil, but oil is a publicly traded commodity, he said. Distributors are free to charge retailers whatever they want without any oversight or transparency.
“There really is a zone demarcation for how gasoline prices are based,” he said. “A gallon of gasoline in Stamford and Darien is considerably more than it is in Milford. It is the same distributor that brings that gasoline to those vendors.”
To be clear, gas is more expensive in Fairfield County. According to AAA, a gallon of gas in Fairfield County is at least 10 cents more expensive than the statewide average and 15 cents cheaper across the border in Litchfield County.
Zoom in and the disparity gets wider. A gallon of gas sold for $2.79 in Westport and $3.09 in Greenwich on Tuesday, according to the website GasBuddy.com, which tracks gas prices. Compare that to $2.31 in New Milford or $2.19 in Cheshire.
That makes sense, as representatives of the Connecticut Energy Marketers Association told the legislature’s transportation committee during a public hearing last week.
“Real estate, legal services, milk, clothing, etc. all cost more in southwest Connecticut than many other parts of the state because they reflect the different factors that go into doing business there, and gasoline is no different,” they said.
According to the Connecticut Petroleum Council, it’s taxation and the relatively small number of gas stations in the area that force the price higher.
“More stations would most likely lead to lower gas prices,” the council said in submitted testimony. “If the population in these towns shrinks, or the number of stations increases, supply and demand would be more balanced.
If you want to see market forces at work in gasoline pricing, Hwang points to the Post Road in Westport, just south of Compo Road, where two gas stations sit side-by-side and are always two of the most expensive in the area.
Those retailers make a choice based on the market to charge more, and consumers have the option to drive up the road and find slightly cheaper gas.
But it’s not “market transparency and elasticity,” Hwang said, if retailers are forced to charge more because of a “pre-existing price structure.”
“Our gasoline retailers are not given the freedom to pass along that market pricing,” he said. “If there is an artificial pricing that imposes greater cost on constituents I’m going to fight that.”