The "Bologna" Behind Gas Prices

The Connecticut Attorney General is pushing to end a secret oil industry policy used to set gasoline prices based on neighborhood zones.

"It targets the more affluent who can pay more, and it targets people who live in the inner city, because big oil thinks they won't shop around," Attorney General Richard Blumenthal told ABC News' Brian Ross. 

The Attorney General said the system prevents gas station dealers from lowering their prices, even if they want to.

"Anytime one of these companies tells retailers that they cannot lower prices, anytime they dictate higher prices, the net result overall has to be bad for consumers," Blumenthal said.

A survey by ABC News found a range of almost 40 cents a gallon in three neighboring Connecticut suburbs.

Regular gasoline in the affluent suburb of Greenwich was $3.43 a gallon.  It was $3.09 a gallon only a few miles away in the suburb of Norwalk.

"The exact same gas delivered in the exact same truck from the exact same company," said Mike Fox, who represents gas station owners.

An industry spokesman defends the secret zone pricing system as appropriate and says it helps keep prices from going higher. "It allows them to adjust price to where competition is the most intense," said John Felmy of the American Petroleum Institute.

The Attorney General disagrees. "The argument that prices will go up is sheer bologna. Competition generally leads to lower prices, not higher prices," Blumenthal said. 

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