Contact:  Gene Guilford gene@icpa.org or Chris Herb chris@icpa.org
For Immediate Release  February 28, 2011

ENERGY PRICES ARE RISING AND WASHINGTON NEEDS TO ACT NOW

Gasoline prices have risen about 20c per gallon in the last two weeks. The average wholesale price of regular gasoline at New Haven Harbor is $2.79 today, before all taxes, transportation and fees. On the 15th of February that price was $2.57.

The average retail price of gasoline in Connecticut is approximately the same as all surrounding states when you subtract state taxes. You may view that comparison of gasoline and diesel average retail prices here > http://icpa.org/consumer_motor.htm

Breaking down the average price of a gallon of regular gasoline into its parts, retailers in Connecticut are NOT recouping their higher wholesale costs in their retail prices, seen here > http://icpa.org/motor_fuels/retail_gasoline_price.htm  If retailers were recouping their costs the retail price would average $3.75 for regular. According to the AAA survey today the average retail price of regular in Connecticut is $3.54.

Below is a background primer on recent events that hopefully describes what is happening today worldwide, NOT just here. This was ICPA's response written to a consumer expressing concern with ALL energy prices.


We share your concern about energy prices and understand that, especially in this economic environment, what has been going on is painful and needs to be stopped and reversed. We want lower energy prices, just as you do.

From the 1850s until the 1960's there were essentially seven companies worldwide and the Texas Railroad Commission that controlled pretty much all of the production, distribution and pricing of crude oil. Through bank panics, recessions, depressions, world wars and all manner of political upheaval, there was stability and twice in all that time fairly plentiful supply; the exceptions being during WWII and then again in the 1970s when the federal government regulated production, distribution and price.

In response to the forming of OPEC in 1960 and the embargoes of the 1970s, crude oil and then other refined products such as gasoline and then electricity and natural gas were added to the major commodity exchanges of the world so that an actual marketplace would theoretically work to recognize supply and demand and then facilitate the daily buying and selling of contracts for these energy commodities. The market, it was thought, would reverse or weaken the power of an OPEC cartel. By the 1970's it was no longer "companies" that controlled world energy supplies it was increasingly "countries," as nations began throwing out the companies that had exploited their national resources and countries began controlling those resources themselves.

The New York Mercantile Exchange [NYMEX], and dozens of other exchanges around the world, are where energy prices are set and have been since the late 1970s. Like all markets, whether equities markets like the NY Stock Exchange or the NYMEX in commodities, these markets react to potentially unsettling news, climbing a "all of fear." While we receive very little actual crude oil from Libya, as this is a world-wide market, there are others who do receive most of that country's 1.9 million barrel per day output. When those nations lose their supply or a part of it, they go into the world market to seek supplies to make up for the shortfall - competing for supply with all other nations around the world, including us.

The US is not isolated in the world marketplace for energy, food, critical materials, even capital. We compete for supplies with everyone else. And, this is not only about Libya, add to that unrest across North Africa from Tunisia to Algeria to Egypt and then Bahrain and others and there is an extraordinary degree of political upheaval in a politically sensitive place. That upheaval, and the impact that potential for impacts on world energy markets, is part of what drives energy prices today.

There is more if you are interested, go to > http://icpa.org/press/press_11_12_10.htm where we wrote about national energy policy concerns and prices last Fall.

In our opinion, our country should produce more of our energy here at home. That does not isolate us from world energy prices, it does protect us to some degree in energy security. We believe our Federal Reserve should stop debasing the value of the dollar, as energy is priced in dollars and anything that reduces the dollar's value increases the things priced in dollars - from energy to agricultural commodities. It has been fashionable from the time of Teddy Roosevelt to today for politicians to wail on "big oil." Truthfully, today "big oil" has a great deal less to do with energy prices than our own federal government and other nation's around the world.

Thank you for writing. I was in Washington last week encouraging our federal government to consider releasing some of our national Strategic Crude Oil Reserve in partial response to the reduction of supply from Libya, and being careful in doing that as no one today can say where all the unrest in that region is leading. Two months ago no one saw all this happening, so no one knows where we will be two months from now. The other piece of encouragement was to have the federal government get the Gulf of Mexico back into the business of producing more energy here at home.

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ICPA represents more than 576 Connecticut based independent businesses. These businesses serve more than 680,000 heating fuels consumers, employ 13,000 Connecticut citizens at the majority of our state's 1,600 motor fuels outlets and 600 heating fuels retailers. ICPA's offices are at 10 Alcap Ridge, Cromwell, CT  06416.  For more information about today's Press Release, contact Gene Guilford or Chris Herb.