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Contact: Adam Joseph

March 19, 2012

Democratic Leaders Announce Plan to Help Provide Relief at the Gas Pump

Proposal would protect consumers from large oil company profiteering

With the price of gasoline climbing (up 15 percent since January 1, 2012) and the summer driving season around the corner, the Democratic Leaders of the General Assembly announced their plans to help provide relief at the pump and protect consumers from profiteering and price gouging by big oil wholesalers.

“Working families are feeling the pressure of skyrocketing gas prices,” said Senate President Donald E. Williams (D-Brooklyn). “Our plan will provide some relief at the pump at a time when folks are struggling to make ends meet and at the same time ensure that big oil wholesalers don’t drive up the price of gasoline. Most of all, this plan puts big oil companies on notice that we won’t stand for them profiteering and taking advantage of consumers.”

“We are taking steps to protect consumers from rising gas prices. We’re lowering the price they’ll pay to fill their tanks and calling on the big oil companies to be responsible,” said House Speaker Christopher G. Donovan (D-Meriden). “This plan will put more money in consumers’ pockets and protect them from irresponsible profiteering.”

The Democrats’ plan:

  • Caps the gross receipts tax (GRT) on motor fuels at $3.00/per gallon wholesale, upon passage.
    • Sunsets 6/30/13.
  • Prohibits oil wholesalers and distributers (those who pay the gross receipts tax) from passing on anything purporting to be based on the tax for the portion of any sales price over $3.00 per gallon.
    • Any such overcharging a Connecticut Unfair Trade Practice Act (CUTPA) violation.
  • Amends the petroleum profiteering statute, C.G.S. § 42-234 et seq. (“abnormal market disruptions”) to include an automatic trigger based on extreme wholesale price increases, for price gouging protections to go into effect.
    • Puts everyone in supply chain on notice of serious penalties for increasing their profit margins during such disruptions.
  • Legislatively declares an “abnormal market disruption” upon passage for a set period of one month in anticipation of further wholesale price spikes.
    • The wholesale price at the Port of New Haven is up $.13 since 3/1/12;
    • The spike has not hit the pumps, with average retail prices rising only $.02 cents since 3/1/12 from $3.99/gal to $4.01/gal.
  • Grants the commissioner of the Department of Consumer Protection authority to impose CUPTA fines of up to $10,000 upon large gasoline wholesalers and distributors who are in violation of profiteering laws.
    • This will strengthen the Commissioner’s authority, necessary because large wholesalers in violation of profiteering statutes have much greater impact on consumers than individual retailers.
  • Institutes similar profiteering protections in regards to home heating oil.

“The high price of gasoline threatens consumer confidence, burdens Connecticut families and endangers the fragile progress our economy has made here in Connecticut,” said Senate Majority Leader Martin M. Looney (D-New Haven). “As the State of Connecticut, we can’t affect the price of oil on the international exchange—what we can do is give our Department of Consumer Protection and Attorney General the tools they need to ensure that large oil wholesaler don’t takes advantage of rising prices to unfairly gouge consumers.”

“While this proposal will have a modest change at the pump, it will ensure that the state is not profiting unnecessarily as gas prices rise,” said J. Brendan Sharkey, House Majority Leader (D-Hamden).

Moderate- and lower-income families feel the rising price of gasoline especially hard. According to a recent report by the Brookings Institute:

“Every dollar increase, holding the number of miles driven constant, would cost these moderate- and lower-income households an extra $530 per year. For a family with an annual income of $20,000, this is an additional 2.7 percent of their total income. Although higher gas prices eventually encourage consumers to cut back on driving or switch to more fuel-efficient vehicles, in the short-run they may have few options but to cut back on other expenditures in the family budget. Since low- and moderate-income families spend most of their income on average, in the very short run they can only choose between spending less on other items and going further into debt.”

“As summer approaches and the threat of gas costing $5 a gallon looms large, this plan attempts to rein in costs at the pump and protect against oil profiteering,” said Senator Paul Doyle (D-Wethersfield). “Capping the gross receipt tax without providing additional protections would only benefit big oil companies. Our plan is the only plan that will protect consumers and empower the Office of Consumer Protection to clamp down on price gouging.”

This feels like the perfect storm, said Gloria McAdam, President and CEO, Foodshare. “More people need food because of rising gas prices. And Foodshare is challenged in getting more food to people who need it because of those same rising fuel prices. Any relief the state can provide will be welcomed by both working families and the nonprofit organizations, like Foodshare, that are striving to help those working families.


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