DEPARTMENT OF ENERGY ANSWERS COLLINS’ CALL FOR EXPLANATION OF HIGH GAS PRICES

WASHINGTON, DC -- Senator Susan Collins received today an initial analysis of the dramatic rise in gasoline prices recently experienced in Maine. The analysis from Guy Caruso, Administrator of the Energy Information Administration, was in response to a letter written by Senator Collins to the Department of Energy that called for an examination into the sudden gas price increase. The Energy Information Administration (EIA) is the independent statistical and analytical agency within the Department of Energy.

"Maine is a largely rural state, and in many cases, residents have to drive significant distances in their day-to-day routines. These dramatic increases in gas prices are a hardship for many Maine families, workers, and seniors who live on limited incomes," said Senator Collins. "We have a right to know what causes a drastic increase in gas prices and what is being done to alleviate the problem."

The American Automobile Association (AAA) reports that gasoline prices rose in all 50 states and the District of Columbia by an average 21-cents per gallon in August. The average gas price increase in Maine during that same period matched the nationwide average. AAA also reports that today's average price of regular gasoline in the Portland area is $1.73 per gallon, compared with $1.57 a month ago. In the Bangor area, gas prices today average $1.69 compared with $1.59 one month ago.

EIA Administrator Caruso attributed the dramatic price increase to "a confluence of events that constrained the gasoline supplies at the same time demand was reaching record levels." In a letter to Senator Collins, Caruso writes, "A pipeline rupture in Arizona, as well as refinery problems in California, the Midwest (Due to the August 14 power blackout), and the East Coast, all occurred within days of each other. With many regions suffering reductions in supply at the end of the summer season after gasoline inventories had already been drawn down to low levels, suppliers were essentially bidding against each other to try and acquire the few remaining supplies available, principally located in the Gulf region of the country."

Senator Collins also requested that the Department of Energy provide her with a projection of gas prices in Maine for the immediate future. The EIA projects the national average price of regular gasoline during the month of October may average about $1.55 per gallon, assuming that crude oil prices do not increase appreciably and there are no other major gasoline infrastructure problems in that time. Caruso said the average gas prices in Maine are almost always within five-cents of the national average.