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Area Gasoline Prices Hit $3-a-Gallon Mark

Posted on: Monday, 17 April 2006, 09:01 CDT

By Mark Ginocchio, The Stamford Advocate, Conn.

Apr. 17--In lower Fairfield County, the threshold is crossed.

Gasoline prices have reached $3 a gallon.

Earlier this month, industry observers said that probably wouldn't happen until Memorial Day -- the unofficial kickoff of the summer driving season, when gas prices historically peak.

But a recent run-up in crude oil prices, caused by the nuclear ambitions of Iran and fears of a shortage of a new fuel additive, moved up the predicted date by seven weeks.

It isn't the first time motorists will be forced to pay $3 a gallon. In August, after Hurricane Katrina struck the Gulf Coast, gas prices surged beyond $3 a gallon for about a month.

This time, however, there's reason to believe the high prices will stick around longer.

When prices spiked after the hurricane, Martine Morette, 29, who paid $2.89 a gallon at the Stamford Gulf station Friday, said she thought they would fluctuate and eventually fall.

"But this has been a steady climb," Morette said. "They're not fluctuating. And if they do, I don't know how much lower they'll get."

If gas costs $3 a gallon and more all summer long, there will be effects, predicted Taylor Garland, 17, who was filling up at the Gulf Gas & Mart on East Main Street in Stamford.

"There are definitely going to be people with a lot less money in their pockets," Garland said.

The average pump price in Stamford Friday was $2.96 a gallon, according to The Advocate's survey of 12 stations. Four of the stations surveyed were charging $2.99 a gallon or higher. One yesterday was charging $3.05.

The Norwalk average was $2.88 a gallon.

In Connecticut, the average price Friday was $2.80 a gallon, according to AAA's daily fuel survey, which includes no gas stations south of Bridgeport.

Prices in lower Fairfield County are usually 15 cents to 20 cents a gallon higher because of the higher cost of living, higher rents for station owners and zone pricing -- a practice in which oil companies charge higher wholesale costs to station owners based on what the market will allow.

If steep prices continue all summer, it will create problems for consumers, said Ed Deak, a professor of economics at Fairfield University.

"There's going to be a greater weight on consumers when they're spending an extra $10, $15, $20 a week," Deak said. "It's problematic, even for those with substantial incomes."

Although demand has not been tempered so far, "it takes time for (motorists) to adjust," Deak said.

Observers think prices will remain high because oil traders are focused on the upcoming switch to ethanol, a corn-based fuel additive used in Connecticut, New York and California, but not the rest of the country.

Federal energy officials have said there could be a shortage of ethanol, which is driving up prices.

Deak said the country could import more ethanol made from sugar from South America, but the United States won't lift a 59-cent-per-gallon tariff on the additive.

The tariff has caught the attention of state officials. Gov. M. Jodi Rell called on the Bush administration to lift the tax on imported ethanol to lower prices in the short term.

Rell's pleas were echoed by U.S. Rep. Christopher Shays, R-Bridgeport.

"I don't care how ethanol is made, just as long as there is a way that (importing it) can help lower prices," said Shays, who thinks an "artificial shortage" has been created.

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Copyright (c) 2006, The Stamford Advocate, Conn.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Stamford Advocate, Stamford, Conn.

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