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The Four-Dollar Gallon

A Reality Again In Parts of Connecticut

As we approach Labor Day—the traditional end of the summer travel season—gasoline prices in Connecticut are again flirting with the $4.00 mark. Indeed, in Fairfield County, the average price for a gallon of regular has already surpassed that milestone. Motorists in the Hartford area are paying an average of $3.973 per gallon. In southeastern Connecticut, the average is $3.964. The statewide average today sits six-tenths of a cent below $4.00, according to AAA’s Daily Fuel Gauge Report.

The statewide average of $3.994 per gallon for regular is nearly three cents more expensive than a week ago and 18 cents more expensive than a month ago.

Connecticut motorists are now also paying more for gasoline than they were a year ago, when the average was $3.916. While pump prices started high and moved lower during the summer of 2011, we’re seeing the opposite happen this year. Domestic supply and distribution issues have been the driving force behind rising gasoline prices over the last several weeks (see graphic). Oil prices have also been increasing amid positive global economic news and continued geopolitical tensions with Iran.

AAA continues to expect that, given current conditions, prices at the pump will decline following Labor Day as the summer driving season comes to a close and the transition from summer to winter blend fuel occurs.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Maria Giannuzzi August 28, 2012 at 01:24 PM
Good comment, Daniella. Cheap transportation has made possible great quantities of produce and other foods at moderate consumer prices. Much of this food is problematic (although not all): pesticide-contaminated, tasteless, lacking nutrients, carrying disease organisms. We have substituted quantity for quality. Not to mention that many factory farms where animals are raised are inhumane and poison neighboring farms and homes. The whole system is calculated to increase profits for a relatively small number of producers.
WebeenHad August 28, 2012 at 01:34 PM
Isnt it ironic that the government created insider trading laws for the general public, yet it did NOT apply those laws to the tens of thousands of government employees themselves (up until this year! link below)? Does anyone have a reasonable explanation for govt employee exception to this important law? No wonder they all want to be career politicians. http://articles.cnn.com/2012-02-02/politics/politics_senate-insider-trading_1_insider-trading-catchall-bill-senate?_s=PM:POLITICS Daniella .. coincidental to your point, the above CNN page has at least 4 different links to stock pushers: 2012 Top Penny Stocks, Best Gold Plays Right Now, Jim Cramers Stock Picks, Todays Top 5 Trades. Paul .. i understand your frustration, but relax, this is all part of the cycle. We had big gas-guzzling beasts in the 1970's. Then Israel was attacked, the middle east went in to turmoil, and the arabs instituted the oil embargo. Oil and its derivatives skyrocketed. You could only get gasoline 2-3 days per week. Then Lee Iacocca saved Chrysler by inventing the economical K-Car. You are doing the right thing. In my opinion, everything is cyclical and this cycle is about to change.
R Eleveld August 28, 2012 at 03:09 PM
Actually Daniella, the Majors and others sold off refineries hence that is how Valero became. Valero bought the refineries that no one else wanted over a decade ago. Relative to the rest of your comment, can you please tell me what you are trying to say. In a free capitalist market with no collusion, if there is a party making too much money competitors move into the market and that drives the price down. Look at Apple and its iProduct juggernaut. How many competitors are there? Venezuela, that has also created a vertical business model: Exploration/production, into refining and end user sales. Granted Venezuelan oil is a very very low grade requiring special cracking processes. If there is money to be made, the socialist Chavez is happy to be a capitalist when it suits his needs. Look at Q8 (Kuwait) in Europe as it attempts to create a vertical business.
Paul Chotkowski August 28, 2012 at 03:17 PM
George please consider that “oil” is an international market mostly denominated in US Dollars [a huge benefit for America]. The US is a net importer of crude oil & is currently a net exporter of distillates [gasoline, diesel, and jet fuel] a situation which most analysts attribute to a decrease in US demand [due to the economy] & supply moving to other markets. One can argue why oil companies have not submitted permits for new refineries [with 2 recent exceptions] and only requested the expansion of existing operations. The fact that the new Arizona Clean Fuels refinery was originally scheduled to open in 2009, but it took SEVEN YEARS TO GET AN AIR QUALITY PERMIT might lend some insight into the issue. It can be demonstrated beyond a reasonable doubt that the Obama administration has engaged in significant activities to decrease the domestic supply of crude and increase the price of distillates in order to make massively subsidised but still uneconomical alternative energies “more competitive”. Lastly George please enlighten us as to the specifics of your claim that the oil companies “have been given BILLIONS of $ in tax relief in order to build new refineries”. I follow these issues rather closely and I know of no legislation that “gave” the oil companies funding and siting approval for new refineries which they subsequently “stole” by refusing to build the authorized / funded facilities. Please cite the H.R or S. B. numbers associated with your claim.
Walter August 28, 2012 at 03:25 PM
Paul - I'll keep my 94 full size bronco. Sure, it only gets 16 MPG but, at 238,000 miles on it, most people would have replaced it at least twice. Additionally, I am doing more for the environment by not dumping my old SUV into a landfill than buying a new econo-car every 3-4 years. Of course, I have plenty of cash for gas by never having a car payment and not having to pay bloated insurance rates due to having a lien on the vehicle.
Bill August 28, 2012 at 03:37 PM
Paul, we are all so proud of you, I'm getting misty myself. Mr webeenhad, oh yeah, the Kcar, I'm sure everyone wants to go back to that shining example of automotive engineering excellence and quality construction.
R Eleveld August 28, 2012 at 03:38 PM
@Daniella, I would disagree on a part of your contention. The participants also are swayed by the market behavior, rumors, water cooler talk, church talk, the DoA guy coming around, the costs of elements, and I can go on. The fact you have a tangible interest in respect to use of the product insulates you no less from making poor decisions as it does the speculator. The speculator is important because they provide liquidity to the equation. That liquidity at any price is required to allow for a smooth market. If not you get drastic and dramatic price swings that would hurt the producer or the consumer even more.
R Eleveld August 28, 2012 at 03:51 PM
Insider trading is related to a person getting material non public information. The reality is businesses like the rule because it keeps acquisition costs (buyers costs) lower, good for the acquirer and its shareholders, but not good for the acquiree or its shareholders (sellers leaving some money on the table so to speak). Think about this for a moment. If there were no insider trading laws, a rumor of an acquisition would cause people to acquire shares, traders would start to see that action and start to acquire shares as well. The price moves higher and a shareholder sells thinking he got a good price, but when an acquisition is announced he might complain that he could have gotten more, but he sold voluntarily. The buyer surely would not complain. As the price would move higher indicating it may be in play, and other acquirers might be interested in an acquisition thus driving the price yet higher which is bad for the acquirer, but not the acquiree. You see the idea here. The are many market participants looking at volume. A good story can’t stay quiet for long, There are people watching plane movements, and meeting locations and car services, and I can go on, all looking for a hint something is up.
R Eleveld August 28, 2012 at 03:51 PM
The only negative other than an acquirer paying more is that someone feels they did not get the information fast enough, but is that not the way the market works? Information is valuable, and some might feel that information was withheld, and that they could have maybe benefited. Yet many traders would observe the uptick as we call it and start to acquire shares slowly thus signaling something is up. When you stifle the information you hurt a seller who had to sell at a lower price vs if information ‘leaked’. Just something to ponder, and the explanation is limited to space available.
R Eleveld August 28, 2012 at 04:14 PM
Maria, what you are talking about is place the fund in a bank and forgetaboutit. Your naivete is showing. The reserve argument is crazy on several levels. Investments are made to produce a return that allows the capital to #1 stay on par with inflation (purchasing power), #2 stay ahead of taxes relative to potential gains (net post tax gain, if taxable), and #3 to produce a return that will allow the assets to grow over time (by accretion). The purpose of investment portfolios that inherently have risk is to reduce the funds that would be required to provide the future benefits. The greater the return, the lower the annual funding requirements. Your idea would result in a massive tax increase because the returns of safe investments in the size of many larger pension funds would be a NEGATIVE. Yes, negative when you take into account just a moderate inflation rate ~2.2%, and a safe 10yr return on treasuries of (~1.5%. 2.2% - 1.5% = -0.7%). The result is an increase in taxes on the Municipal and State levels to cover the effective difference between standard actuarial return of 8% to a negative say 1%, a 9% delta. You have complained of taxes going up, and you would I am sure like to see your rent go up 25% just to cover this concept of yours. http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Paul Chotkowski August 28, 2012 at 04:24 PM
@B.R.E.E. in my experience http://gasbuddy.com/gb_retail_price_chart.aspx is an easy to use accurate database of historical gas / crude prices broaken down to the terminal level. If you want a government sources try http://www.eia.gov/petroleum/gasdiesel/ and download the Excel spreadsheet [named PSWRGVWALL.xls] with a click on the “full history” icon on the right. Either way, you can see quite clearly that though one’s memory might be fogged by a post Immaculation hangover and consequent laps in short / long term memory, national average gas prices were much much lower in January 2009. Needless to say you have to adjust the national average figures for CT's outrageous gas tax [much of which flows to the general fund not to road / bridge construction / maintenance or even public transportation infrastructure] that is why I generally prefer Gas Buddy. Where crude / distillate prices would have been had BHO not been so anti oil, gas, coal, & nuclear is hard to say but had the US operated under a policy to reduce consumer prices rather than "necessarily increase" consumer price, PRICES WOULD HAVE BEEN LOWER! Releasing oil from the Strategic Oil Reserve notwithstanding, the Obama Administration's avowed goal has been higher prices to make alternative energy more competitive and they got what they wanted! Green is the new Red. Higher gas prices as a consequence of an ideology [not economics or technological limitations] is just another unvoted REDISTRIBUTIVE TAX!
R Eleveld August 28, 2012 at 04:24 PM
It is that simple. Econ101. Price is the messenger in a free market. If the price of a commodity goes up it indicates scarcity of the product and signals market participants that more product is needed. This in turn results in several effects, such as hoarding by some, and conserving the product, reduced utilization, becoming more efficient. It also will force some to look for alternatives. It tells producers there is a demand and to produce more of the product. When the price is low it has the opposite effect on users.
R Eleveld August 28, 2012 at 04:33 PM
@Webeenhad Its all about friends as I have said ad nauseum. Congress exempts itself from almost every law it passes. Some of us have known this for decades. Discrimination, sexual harassment, labor relations, and the list goes on. The link below was something I found with a quick search. This issue reminds me of George Orwell's book, "Animal Farm", Wherein he writes:"All pigs are equal, but some pigs are more equal than others." Doesn't that sound familiar :-? http://www.bloomberg.com/news/2011-12-08/congress-isn-t-supposed-to-be-above-the-law-commentary-by-stephen-carter.html
R Eleveld August 28, 2012 at 04:44 PM
Very well put and with insight Paul C. We all should be opposed to many of the green generation ideas in the electrical power area. Specifically Winds and Solar. It creates by need a redundant cost situation driving electric prices higher for ALL consumers with no real economic or "green" benefits.
Daniella Ruiz August 29, 2012 at 11:24 PM
i fail to comprehend the nature of this apparently. i was under the impression the 'stock market' was to enhance the strength and viability of a corporation or business (ie production, innovation, expansion of business, etc) rather than a means to its own end, (ie traders making money from sell/buys, rather than investment into the company itself). what it seems is the financial sector has disengaged itself from the actual production of goods to a production of perceived value of goods. i may just be too naive to participate in such a sham, as i would buy stock based less on 'expected earnings' and would foolishly base my choice on an actual product or service delivery. we have now a stock market that generates its own profits, based on the fee revenue of billions of trades performed, having nothing to do with anything close to a tangible product. it is parasitic, but is wholly dependent on the existence of those corporations, for without them, the Wall Street Shirts would not have a function/job to do. i would dare say, the market is more likely a detraction and impediment, than a service for honest and productive job creating companies.
R Eleveld August 30, 2012 at 02:32 AM
@Daniella... This is in several parts. The stock market was originally for the purpose of raising capital for investment into enterprises that had an innovative idea, method, system, product, or was looking to expand. Equity capital is inexpensive capital as in there is no need to pay it back or pay interest on it. This funded innovation and it included inherent risks. The investor purchased shares that at any given time had a value that arguably included the hopes, dreams, aspirations and risks inherent in the enterprise. If the business was successful, well run, and profitable, the investor hoped they could make some money by seeing dividend income and/or appreciation in the value of those shares. 30 years ago that was what our business was. Fast forward. We still have investors today, however they make up a fraction of the trading volume. New Companies try to raise money through Venture Capitalists that take an early stake in a business for the hopes of a large pay day. We see companies go to market at inflated values. Facebook“FB” is an example. I can talk for an hour on this issue. One thing you seem to be missing is that after a company sells shares to the public, it has no vested or direct interest in the share price....
R Eleveld August 30, 2012 at 02:33 AM
Buying shares means you are arguably convinced the shares will rise in value, the seller is equally arguably convinced the shares will decline in value. The company has no involvement in the transaction after it initially goes public. Exceptions apply. FB has no control over what the millions of buyers and sellers at any given moment feel what the stock is worth through their respective buys and sells. Why has this happened? We made it too cheap to trade. Wow that was a tough one to figure out… You lower transactions costs to literally a fraction of a cent per share, we then went to decimal trading and then to hundreds of a cent trading, and low and behold you only need to see a $0.005 movement to buy and then sell. So you have $100K, and you buy say 5,000 shares of FB, and it moves up 2 cents and you gross $100, and it costs you $10 or $20 to buy AND sell so you net $80 or $90. Not bad for a 5 minute trade. Do it 10 or 15 more times and you are making a grand a day. I am not saying there is no risk, yet you can control those elements unlike at a casino.
R Eleveld August 30, 2012 at 02:34 AM
The stock market work on psychology and earnings drive individual stocks to a degree but the market takes the sum of the feelings of the millions of traders and investors and places a value on those cumulative hopes and dreams. That is why things sometimes seem to be not working properly. The market has always generated profits but when you lower the cost of transactions you get more transactions. Econ101. So it is the existence of AT&T and IBM and ExxonMobil that created this problem. That is the same thing as saying because we have more variety in the grocery store that people eat too much. So if we reduce the number of items people will get thin? That is nonsensical. Your comments border on Marxism. So how would you suppose Henry Ford would have gotten started, or Steve Jobs, or Bill Gates, or Sergey Brin and Larry Page or well you do get the idea.
Daniella Ruiz August 30, 2012 at 02:45 PM
and thus the capital invested is siphoned off as opportunist profit rather than remain committed to the company/product itself? scale wise, it is indeed a win/win for the trader/market business, yet it contaminates the company/corporate stock incentive, as is demonstrated by huge bonus/ options packages that are taken (and i emphasize the word TAKEN) by CEO and boards of dirs, that casually cut costs (ie>> fail to re-invest profit, plan effectively, other) that ends peoples jobs/livelihood. if the only reason some of these people have a company or job is 'to make money' and nothing else, they are not part of the solution. rather they become leeches of other's work effort and wealth. being a financial planner/consultant i understand your position is biased to that end, rather than to the actual task of producing, sweating and job creation.
Tom August 30, 2012 at 04:10 PM
eleved you really didn't mean this "One thing you seem to be missing is that after a company sells shares to the public, it has no vested or direct interest in the share price" Of course they do the number one responsibility is to shareholders wheter that be increasing stock value dividends or both.
R Eleveld August 30, 2012 at 04:40 PM
@Daniella, what part of my telling you that a company has nothing to do with the trading of a stock between parties did you not understand. The “opportunist profit” which I presume you mean as trading profit has nothing to do with capital the company received at IPO. You are presuming incorrectly that those trading dollars somehow are ‘capital’ dollars to be used by a business. That is a far reach. The second paragraph can’t be responded to because I am not sure of your point. If by company you are referring to the issuers of stock, then your mindset is wrong. Bill Gates and Steve Jobs did not create businesses to ‘make money’ as the sole purpose as you imply. They built Microsoft and Apple to create something, where there was nothing. If you were referring to traders, I would beg to differ. I am not a trader professionally, but an investor. However traders provide liquidity and that is a service. I just think it has gone way out of reasonable, but when you cut costs to fractions of a cent, what can you expect. Remember however you still have to generally put up 50% of the price of stock before you can trade on credit and that keeps a small lid on things. Otherwise you would see 1928 all over again. Your comments are disingenuous. I am biased to a free market, no bailouts, and people understanding how things work. I am not a fan of day trading or High Frequency Trading and Automated Trading. I do understand them as I should.
Luis Smart August 30, 2012 at 04:55 PM
Bottom line is that this is price gouging by the greedy oil companies. The government needs to step in and regulate the industry.
R Eleveld August 30, 2012 at 05:28 PM
@Tom, to be clear, I was referring trading. A company has no vested interest in a transaction(s) or trade(s), after issue. I may not have been clear when saying they have no interest in price. Again in the context of the traders and transactions, the company or entity has no interest in the price. Meaning a share moves up or down a $1 during the course of a day is of no concern to the enterprise or entity, per se. No capital benefit accretes to the business because 100K or 1MM shares traded over an 1 hour at a given price, higher or lower. Traders truly do not care about the business as a long term investment, it is purely a trade. However the share price is paramount to the investor/shareholders. Share price appreciation and dividends are what provides the impetus for investors to invest. Employees or those within the company may have a vested interest because of options, and/or other ownership methods or proxies. Those with an ‘invested’ interest direct or indirect, have an interest in price. Price appreciation is affected by growth potential, profit margins, and many, many other factors including the psychology of the market, industry and business space. Lastly, price appreciation is positive reinforcement to the enterprise and shareholders that management and employees are successfully executing their business operation. They all work together to produce operating profits, and with it share price appreciation.
Paul Bahre August 30, 2012 at 05:32 PM
One thing no one here has ever even looked at. The State of CT a few years ago was mulling it over. Exon Mobile has a chart of delivery charges for gas. It's not based on how many miles from the New Haven Terminal but it's determined by Zip Code. So Gas in Rich Towns, Farmington Valley, West Hartford, Glastonbury, Litchfield County, Greenwich, Farifield Co. All areas like those have premium charges for gasoline delivery. Places like East Hartford, Bristol, Bridgeport, and poor places have a lower delivery cost. The long short is: Exon Mobile has determined how much they can soak the consumers for in which markets and they do. I personally purchase all my gas in Mass.
R Eleveld August 30, 2012 at 05:53 PM
We also hear a lot about Corp. cash positions. Many in the Billions of Dollars. Some companies hold cash overseas because tax rates are lower, and to repatriate means tax hit. Cash wherever it is held is an asset. To bring it 'home' means a 35% tax bite. So companies allowing the funds to languish offshore where it can be used or invested offshore. Yes taxes have an effect on behavior, just like it does for you as an individual. When people, and businesses are run by people in case you may have forgotten, do not use cash when they are uncomfortable with risks and.or they feel there are unknowns. Individually, if you have cash to buy a car, and your income is reduced say 20% even though you might till have excess cash flow and cash on hand, you will NOT make that car purchase. You WILL delay it until you feel more comfortable, or until you have to buy that car. Businesses do the same thing you as a person do, hold onto cash. Shareholders would not want to see cash spent in an uncertain environment. Obamacare (Note: POTUS calls it that) and Dodd-Frank are still not written! There are rules related to the laws that are unknown and thus fraught with danger for every businesses and consumers. No one wants to take on unknowns, and they will sit on cash until the dust clears and things are settled. Also many companies are not going to increase headcount unless they must, especially those in the 50 employee range where Obamacare and CT sick pay lurks.
R Eleveld August 30, 2012 at 06:09 PM
Noun, 1. price gouging - pricing above the market price when no alternative retailer is available. [a vague definition] Wikipedia is also clearly vague on this issue. I personally am opposed for reasons of signal to price gouging laws and to the fact that the less fortunate [poor] are most harmed by these ideas. Relative to oil prices.... Do you mean collusion among the 115 producers(wikipedia) tens of thousands of retailers, traders, oil company personnel, and everyone else. I forgot the local gas seller down the street, and his competitors within a mile or so. I knew I was out of the loop. Regulation would add cost that you would pay and have no effect on the world price, supply, and demand. Show me a sign of greed. Show me a company that is being ‘greedy’. BTW, Do you also complain when the price declines? Did not think so.
R Eleveld August 30, 2012 at 06:38 PM
Democrats should not be complaining since they are all about taking from the 'rich' and giving to the 'poor'. Isn't that an overlying concept the Democrats support? I do not, but then this is CT. http://www.cga.ct.gov/2006/rpt/2006-r-0319.htm http://knowledgeproblem.com/2011/01/24/an-act-purporting-to-ban-gasoline-zone-pricing-in-connecticut/ http://knowledgeproblem.com/2011/03/02/zone-pricing-ban-proposal-advances-in-connecticut-zone-price-ban-law-in-new-york-still-not-working/ I also buy my gas and alcohol, and now other things. Mass is better off.
Kaptainsteve August 30, 2012 at 07:36 PM
We are flushing this country right down the snot hole.
jane August 30, 2012 at 07:46 PM
The current Energy policy clearly favors oil, but many people are trying to change that. Will gas continue to rise? I really can't figure out why it is still as cheap as it is. I can't think of anything I bought in 1970 that has only risen in price by X's 3 in 2012. But regardless, it wasn't the Bush administration that 'caused' the gas to go to $4.26 anymore than it is Obama causing it to go to $3.90. If the Prez had any control over the international cost of oil don't you, in an election year, he would have slashed the cost, don't you think? And #Grumpy - your comment is spot on. I would add though, that Keystone will add nothing to the USA, except the liability of a Russian made pipe bursting under someone's farm or water supply.
R Eleveld August 30, 2012 at 08:40 PM
@ jane, you said Russian made pipe. Where does that tidbit come from. Please provide substantiation for that statement.

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