Gas prices hit Rocky Mountain low

Lack of pipeline capacity means gallon at ghostly low in Casper, Wyo.

A gas station in Cheyenne, Wyo., on Wednesday advertises some of the least expensive gasoline in the United States. According to AAA, Wyoming has the nations cheapest gasoline. Colorado is fourth-cheapest. Enlarge photo

Mead Gruver/Associated Press

A gas station in Cheyenne, Wyo., on Wednesday advertises some of the least expensive gasoline in the United States. According to AAA, Wyoming has the nations cheapest gasoline. Colorado is fourth-cheapest.

CHEYENNE, Wyo. 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 Colorado, Montana, Utah 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 Dakotas booming Bakken shale are pooling in the Rockies because there isnt 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 theyre 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 doesnt 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 Im heading to Colorado, I buy all my gas here because its 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. Wyomings gasoline taxes are second-lowest in the country at 32.4 cents, according to the American Petroleum Institute.

New York has the highest gasoline taxes (69 cents), followed by California (67.1 cents). California also has specially blended and pricier gasoline.

While the Rockies arent exactly awash in oil, the regions relative abundance has an effect, said Jim Ritterbusch, president of energy consulting firm Ritterbusch and Associates in Galena, Ill.

Theres pipeline construction going on all over the place trying to get that crude moved out of North Dakota, he said. Most of the interest has been eastward toward the Midwest and trying to get that stuff toward the East Coast.

Proposed projects such as Calgary-based TransCanadas 1,700-mile Keystone XL pipeline, which could carry Canadian and potentially North Dakota oil to Gulf Coast refineries, could have a big effect on U.S. oil supplies, he said. Environmental groups oppose Keystone, and the project is under review by the State Department.

Its all a slow-moving process, he said. But its all good. We are becoming a big producer of crude oil again.

In just six years, North Dakota rose from the No. 9 oil-producing state to No. 2, behind only Texas. North Dakota now accounts for about 12 percent of U.S. oil production, up from 1 percent five years ago.

Horizontal drilling and hydraulic fracturing blasting water, sand and chemicals down wells to split open deposits made it possible. Much of North Dakotas oil has to be shipped elsewhere by rail because of the tight pipeline.

There is upward pressure on gas prices. Nationwide, including in the Rockies, gasoline prices are up slightly for the first time since last summer amid higher global oil prices driven by rising global demand, analysts said.

Meanwhile, unpredictable events overseas and closer to home such as last summers California refinery fire and pipeline shutdown that drove prices close to $5 in parts of that state could drive up prices.

Hitch said hes not one to let high gasoline prices interfere with his travel plans. I keep an eye on it, but it doesnt slow me down, where Im going or anything, he said.

His sister in California feels a bit more strongly.

She complains about it being over $4 most of the time, Hitch said. Its nice to be in a place where its cheap.