Monday, March 12, 2012

More on Regional Disparities in Gas Prices

More on the regional disparities in gas prices from yesterday's NY Times (see previous CD post here):

"The price of gasoline is rising, but the nation isn’t sharing the pain equally (see map above from GasBuddy).

The average price of a gallon of regular was $3.76 a gallon on Friday — up 8 percent in the last month — a tabulation that masks significant regional disparities, said Avery Ash, manager of federal relations for the AAA.

A gallon of regular was only $3.33 in Colorado, for example, and in Wyoming it was $3.28, the lowest in the nation. Along the Gulf of Mexico, the price was a bit higher: $3.59 in Texas, $3.60 in Alabama and $3.62 in Louisiana. For nastier numbers, turn to the Northeast and the West Coast: $3.99 in New York and Connecticut and a whopping $4.35 in California.

Global energy markets determine the national trend for oil and gasoline prices, and those markets have been rattled by tensions with Iran. Yet energy markets are also resiliently local, as the patchwork quilt of gasoline prices illustrates. A flood of relatively cheap oil and gasoline is washing through parts of the American heartland, but it’s barely reaching consumers in the rest of the nation.

The price for Brent crude, widely viewed as the global benchmark for oil, was about $126 a barrel on Friday, far higher than for West Texas Intermediate, often called the American benchmark, which was about $107. The gap has been widening. North American oil “is trading at a discount to world prices, because it is landlocked and can’t easily be transported to world markets” — or to refiners in the Northeast or the West Coast, said Andrew J. Black , president of the Association of Oil Pipe Lines. And East Coast gasoline prices reflect the higher Brent crude price, said Tom Kloza, chief oil analyst for the private Oil Price Information Service.
Crude oil production has increased sharply in Canada and in the central United States in recent years — including initial production from the Bakken Shale, an oil-rich deposit in North Dakota. This has created what the White House calls a bottleneck in Cushing, Okla., the midcontinent storage hub."