Governor asks for explanation on high gas prices
Why are Wyoming’s prices still high when rest of the nation is seeing a drop?
by Governor Freudenthal’s office
September 20, 2006
(Cheyenne) Wyoming Governor Dave Freudenthal is seeking answers as to why gas prices in Wyoming and neighboring states remain high even as prices continue to drop across the country.
In a letter sent to regional refineries Wednesday, Freudenthal followed up on recent conversations between his office and the refineries that sought to explain the gas price differences between the Rocky Mountain states and much of the rest of the United States.
"The explanation that's been offered is that the gas price drop in other parts of the country is really related to stockpiles that were developed in anticipation of hurricanes that didn't occur, so they ended up with a supply glut that's driven the price down," Freudenthal said. "But the Rocky Mountain region doesn't have access to those surplus product reserves because there aren't pipelines that can move that product to the interior of the country.
"That explanation may be correct, but I'm hoping that some additional information from them may be useful in understanding the problem."
Following is the full text of the governor's letter, which went to several refineries in the region.
Earlier this week, a very angry constituent called my office to report that regular gasoline in Branson, MO was $1.85 per gallon. He went on to say that the price was $2.09 in Corpus Christi, TX and $2.13 in Omaha, NE. He wanted two things: First, he wanted to understand how this could be, given that the price was $2.64 in Cheyenne even with lower tax rates than the other states. Second, he *and many like him * is requesting immediate, direct action against suppliers, whom he sees as the offending parties.
I have to say that I share his puzzlement and his frustration. Wyoming consumers most frequently benefit from among the very lowest retail gas prices in the United States. This was the case as recently as a few months ago. Now, after several weeks of significant declines in wholesale prices, I note that a majority of other states have average retail prices below those available here in Wyoming and some of our neighboring states, including Montana, Utah and Colorado, which are plagued by a similar situation.
While I understand higher oil supply prices must be recovered by refineries through higher wholesale gasoline rack prices, I expect that reductions in oil supply costs would be recognized quickly in the form of wholesale price reductions as well.
I have the same concern and expectation where the failure to reduce prices is attributable to retailers and expect that some of the potential price lag may be occurring in that market segment.
This all boils down to a matter of fairness to consumers. If consumers are expected to be understanding of market forces when world oil prices and refined gasoline prices are increasing, then these same consumers deserve to benefit quickly and commensurately when wholesale prices are declining.
Consumers are appropriately angry over the current situation. I encourage you to take immediate steps to rectify the matter and lower wholesale prices where possible in fairness to consumers, and remind you that situations such as this often lead to investigations, new legislation, regulations and reporting requirements.
I would appreciate an immediate clarification of the circumstances I have described here. If there are ongoing problems associated with adequate plant, pipelines and refining infrastructure, we need to know of them so that the state of Wyoming can participate in finding solutions.
I look forward to hearing from you very soon.