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Oil bottleneck gives Rockies cheaper gasoline

Published on NewsOK Modified: February 1, 2013 at 12:39 pm •  Published: February 1, 2013
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CHEYENNE, Wyo. (AP) — A boom in domestic oil drilling has helped lower U.S. gasoline prices, though the steepest drops have missed California commuters, Midwestern farmers and even New York commodities traders who know all about oil and gasoline pricing.

You have to be in the Rocky Mountains to see the lowest prices — ideally in Casper, the Wyoming city of 56,000 people where gas costs $1 less than what many drivers on the East and West coasts are paying.

At $2.69 a gallon for regular, Casper had the lowest prices of any city on Friday, according to AAA.

Meanwhile, drivers in Montana, Utah, Colorado and New Mexico enjoyed gasoline prices at least 33 cents below the national average of $3.46.

The reason? Cheap Canadian tar sands oil and oil from North Dakota's booming Bakken shale are pooling in the Rockies because there isn't enough pipeline capacity to export enough of it to drive down prices elsewhere.

U.S. pipelines generally were built to carry oil from the coasts inland, not the other way, said Michael Green, an AAA gasoline price specialist.

"You have all of these supplies that are building up as well, and they're trapped in the region," Green said.

As a result, refineries in the Rockies region are scoring good deals on oil and processing it to be sold at lower prices at the pump. That doesn't do much good for, say, a Vermont maple syrup producer who might soon be looking to ship from the state with the seventh-highest gasoline prices ($3.66 a gallon) to Connecticut (fifth-highest, $3.79) or New York (second-highest, $3.82).

Hawaii had the most expensive price ($4.13) on Friday followed by California (tied with New York at $3.82).

All of that was OK with Pete Hitch as he recently topped off his SUV for $2.60 a gallon at a Cheyenne truck stop. Hitch was headed from his home in Montana (second-cheapest on Friday, at $3.01) across Wyoming (cheapest, $2.92) to Colorado (fourth-cheapest, $3.114, after Utah, $3.112).

"When I'm heading to Colorado, I buy all my gas here because it's cheaper," said Hitch, of Hobson, Mont.

Earlier, he had filled up for $2.45 a gallon in Casper. About 10 miles south of Cheyenne, in Colorado, he faced prices somewhat higher because of higher fuel taxes.

Low to moderate fuel taxes in Rocky Mountain states are part of the equation. Wyoming's gasoline taxes are second-lowest in the country at 32.4 cents, according to the American Petroleum Institute.

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