Zone gasoline pricing — secretive and nonsensical

These prices were from January 2019. (CTMirror.org)
Jim Cameron is founder of the Commuter Action Group and advocates for Connecticut rail riders. He writes a weekly column called “Talking Transportation” for CT Mirror and other publications in the state. Read past columns by clicking on the photo. Contact Jim at [email protected].

Connecticut’s free bus fares are gone and lawmakers have allowed gas taxes to rise to 20 cents a gallon as of April 1.  But the end of our state’s “gas tax holiday” next month isn’t the reason gasoline prices vary so much from town to town.

Just why does gasoline cost 60 cents a gallon more in Greenwich than in Bridgeport, 84 cents a gallon more compared to Hartford and 90 cents a gallon more than in East Hartford?   Is it because folks in Greenwich are richer and can afford it?  Or is it because it costs gasoline station owners more to operate in that Gold Coast zip code?

While both factors are probably true, the reason gasoline costs more in some Connecticut towns than in others is because of something called “zone pricing,” an industry practice that does all but set the price for the commodity that is charged by distributors and passed along to their customers, the local gas stations.

Lawmakers have debated zone pricing many times in recent years, but it has never been killed. I wonder why, given its apparent unfairness.  But who’s to explain the mysteries of what our lawmakers do, influenced as they are by lobbyists.

Let’s follow the gasoline distribution process to better understand price-setting.

A tanker ship arrives in New Haven and offloads its cargo (there are no gasoline pipelines to our state) onto tanker trucks.  There are 30 gasoline distributors in Connecticut and as they truck their gasoline to gas stations, they obviously incur costs.

Big chains of gas stations can negotiate better deals than the independently owned stations.  So to compete, “Mom and Pop” gas stations often sell snacks and sundries.  In effect, your beef jerky is subsidizing your cheaper gasoline.

But it’s the secret zone pricing rules, set by the distributors, that breaks the state into about 50 different zones and determines how much gas station owners must pay for gasoline. Pricing is determined by traffic volume, nearby income levels, the competitive landscape and other factors.  And gas station owners, who set their own prices, say they are making only seven cents a gallon profit.  But if the station owners must pay distributors more for gasoline, so will you.

Distributors don’t tell us where their zones are or what their pricing difference is from one zone to another.

If none of this makes sense to you, there’s a good reason:  it doesn’t.


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8 responses to “Zone gasoline pricing — secretive and nonsensical”

  1. Johnny cardamone

    The bottom line is Joe Biden, and the democratic mafia have robbed the American people!:(

  2. Kenneth Werner

    Gas prices in New Milford always seem low.

  3. David Muccigrosso

    @Johnny, how do you propose that Joe Biden and the “democratic mafia” are responsible for a PRIVATE INDUSTRY’s practice? Just curious.

  4. David Justin Lynch

    Why doesn’t your legislature subpoena the information? Why doesn’t someone sue the distributors for antitrust violations, price-fixing, and RICO?

  5. Victor Cavallo

    “Distributors don’t tell us where their zones are or what their pricing difference is from one zone to another.”
    C’mon Nancy! You can do this!! Find your “deep throat’ in a garage some where and follow the money.

  6. Bryan Meek

    With the 25 cents gas tax coming back on line next month, the toll tax kicking in on the delivery trucks, and the daily stories about global instability, allies working against us, and on top of that our domestic war on cheap energy, it will be interesting to see how much gas can get up to this time.

  7. Bryan Meek

    Oh and just wait until they “get rid of gas”. Is anyone in their right mind going to make the 40 year investment in underground oil tanks or just let the ones they have sit there and rot until they go out of business? What happens then now that the underground fuel tank reserve gas station owners have been paying into was stolen by the legislature into the general fund?

  8. Bryan Meek

    At 25 cents plus 8.5 percent per gallon wholesaler tax hidden to customers, and IFTA taxes, IRP taxes, MCS fees, 2290 taxes, and now new toll taxes, these distributors have NOTHING on the biggest gouger in the entire equation the state of Connecticut, who takes 6 percent of your income before you even get to pay all of these other taxes.

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