Jolted by gas prices? Blame Congress

sjones@thesunnews.comMarch 27, 2014 

Wondering why the price of gas has gone up more than 16 cents a gallon on average along the Grand Strand in the last month?

Want to know why the price jump was steeper at Myrtle Beach area stations than it was in Columbia or Greenville or Spartanburg? Want to know why the average price of a gallon of regular gasoline in the Carolinas is highest now in Myrtle Beach, Charleston and Wilmington, N.C.?

Thank the U.S. Congress.

But not the current Congress, already the brunt for so much else.

It was 66th Congress, which passed The Merchant Marine Act on June 5, 1920.

It seems a convoluted journey, but follow along.

The average price of a gallon of regular gasoline in South Carolina Wednesday afternoon was $3.238, the second lowest in the nation, according to GasBuddy, which tracks gasoline prices nationwide. Montana had the lowest average, $3.237.

In the Myrtle Beach area, GasBuddy reported, Wednesday’s average price was $3.327 while it was $3.205 in Greenville, the metro area with the second lowest average price in the nation.

Angela Daley, spokeswoman for AAA of the Carolinas, said the reason is because of the transportation cost to move gasoline from refined petroleum pipeline terminals in the Upstate to stations along the coast. While that seems reasonable, it doesn’t work when you look at average gas prices a year ago.

At that time, the statewide average was $3.404. At-the-pump prices were $3.327 in Greenville and $3.405 in Columbia, where a gallon of regular gasoline was 8.9 cents cheaper than in Myrtle Beach.

Daley couldn’t say why the surface transportation charge didn’t produce the same price differences a year ago as it is now.

Nor does it explain why a gallon of gas on average in South Carolina costs less than Oklahoma, a state spider webbed with pipelines, where a gallon of gas cost on average $3.58 Thursday.

And it has nothing to do with state fuel taxes, either. Oklahoma’s state fuel tax is 17 cents a gallon, just 0.02 cents higher than South Carolina’s.

Part of the increase, said Daley and Gregg Laskoski, senior petroleum analyst with GasBuddy, is the daylight savings time syndrome. Just like clocks, gas prices spring forward this time of year.

Refineries now are switching production from a winter blend of gasoline to a summer blend of gasoline. To do so, they must drain production lines of the winter blend and use the opportunity for refinery maintenance, Laskoski said. The maintenance creates a supply squeeze which results in an at-the-pump price increase.

But that increase is felt nationwide, and no more so along the Grand Strand than in other parts of South Carolina.

Enter the U.S. Congress and the fact that much of the gasoline sold between Wilmington, N.C., and Charleston comes off ships that dock at the two ports.

In 1920, Congress wanted to protect and promote U.S. flagged shipping and mandated in The Merchant Marine Act, also known at the Jones Act for the senator who introduced it, that all shipping between U.S. ports must be on U.S. flagged vessels with U.S. crews.

The problem, though, Laskoski said, is that there is a shortage of U.S. flagged vessels, and those that do ply the routes recently raised their freight rates.

The Heritage Foundation, which in 2010 advocated for a repeal of the legislation, said the limitation on who could ship between ports cost U.S. consumers that year between $2.8 billion and $9.8 billion. The number of U.S. flagged ships had dropped to just 189 in 2005, according to a letter in The Houston Chronicle by two Heritage Foundation executives.

That was down by 60 ships in just two years and nearly 900 since 1955.

Of those 189 ships, the letter said, 100 were engaged in transport between U.S. ports.

And, according to Laskoski, it is now cheaper to ship petroleum from Houston to South America than it is from Houston to Tampa.

Laskoski said that gas prices in the Myrtle Beach area ranged between $3.18 a gallon and $3.45 a gallon on Wednesday morning. He also said that this month, the price of a gallon of ethanol has gone up by $1.50, which translated to between 7 cents and 8 cents a gallon at the pump.

And while this might help explain the current gas price rise, Laskoski said there is another dynamic that operates in places such as Myrtle Beach.

Tourists. They need gas, and the price is of little consequence.

Laskoski said there are places near Disney World now selling a gallon of regular gasoline for $5.

Because of that, he said to expect the price to increase even more into the tourist season. Daley said she expects a price drop in the next two weeks.

Contact STEVE JONES at 444-1765.

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