Millions of gallons of unsold gas piling up

Sales in Connecticut have decreased as much as 60%, which has led to a drop in state tax collections

With sales down as much as 60% at stations across the state, millions of gallons of unsold gasoline have been piling up across Connecticut.

That has led to a recent battle between gasoline retailers and the state, but state officials announced Thursday they had reached an agreement to grant an important waiver that would help solve the problem.

The millions of unsold gallons are sitting in delivery trucks with nowhere to go as tanks at gas stations remain largely filled because of a steep decline in driving due to business closures and a stay-at-home order issued to slow the spread of the coronavirus.

On an average day, 4 million gallons of gasoline are sold in Connecticut by 1,400 retail stations — but those sales have been sliced sharply.

The gas sitting in trucks now is known as winter blend — a more-polluting grade of gasoline that is sold in the colder months. But as the calendar clicks toward June 1, the stations must start selling summer blend — and they are subject to fines because it is illegal to sell the winter blend during the summer months.

The retailers have been asking for an amended waiver that would allow them to continue selling the winter blend — even in warmer weather — until the supply is completely sold. At that point, the stations would switch to the summer blend to comply with environmental regulations.

All of the surrounding states — New York, Massachusetts and Rhode Island — have solved the problem through waivers or various regulations, retailers said.

One waiver had already been issued to sell the winter blend until May 31, but an amended waiver was needed to sell off the entire supply of the inventory, officials said. Gov. Ned Lamont issued an executive order in late March on the issue, but the retailers said they still need more relief, which was finally granted Thursday.

Chris Herb, who represents about 1,000 gasoline retailers through the Connecticut Energy Marketers Association, said the problem is huge and recently has been getting worse.

“The entire national storage and distribution system for gasoline is full,” Herb said. “It is virtually to the top. There is nowhere to put it. There’s no more places to store it. … I suspect that the refineries have already retooled for the next batches that come out that will be compliant to the summer blend.”

In Connecticut, the lack of demand has caused problems with the unsold winter blend.

“It’s the barge sitting in New Haven harbor who can’t offload the product,” Herb

said. “He came to New Haven with a barge full of gasoline. He can’t put it in those tanks because those tanks are full. Those tanks can’t be offloaded into the trucks because the trucks are full. The trucks cannot deliver to the gas stations because the gas station tanks are full. That’s why we had negative crude prices. It is the reason why we need to be able to sell off all this inventory because there’s nowhere to put it.”

The two state regulators involved — the Department of Energy and Environmental Protection and the Department of Consumer Protection — said Thursday that “additional flexibility is warranted” to deal with the oversupply under highly unusual circumstances.

The state regulators said the amended waiver will be in effect “until the gasoline supply that is stored in terminal storage tanks for distribution to retail outlets and wholesale purchaser-consumers, and meets the conditions of the U.S. EPA’s March 27, 2020, waiver, is depleted.”

They added, “In addition, Connecticut gasoline retailers and wholesale purchaser-consumers may continue selling or dispensing gasoline that meets the conditions of U.S. EPA’s March 27, 2020, waiver until their supplies are depleted.”

The large drop in gasoline sales recently has caused a corresponding drop in state tax collections. Lamont’s budget office has already lowered its estimates on gasoline tax collections, and the numbers could drop further, depending on how long the shutdown lasts.

House Republican leader Themis Klarides of Derby said she understands the supply issue because she drives about 25,000 miles per year, including many trips to the Capitol in Hartford. She said her driving — like that of most others — has been sharply curtailed and her gasoline purchases have dropped off.

Klarides said allowing the remaining winter blend gasoline to be sold is a good compromise.

“That would seem like a common sense solution to the problem,” she said.

Christopher Keating can be reached at ckeating@ courant.com.