Why do gasoline prices differ according to region?Now look at the present GasBuddy.com map of U.S. prices:
Although price levels vary over time, Energy Information Administration (EIA) data indicate that average retail gasoline prices tend to typically be higher in certain States or regions than in others (Figure 2). Aside from taxes, there are other factors that contribute to regional and even local differences in gasoline prices:
Proximity of supply - Areas farthest from the Gulf Coast (the source of nearly half of the gasoline produced in the United States and, thus, a major supplier to the rest of the country), tend to have higher prices. The proximity of refineries to crude oil supplies can even be a factor, as well as shipping costs (pipeline or waterborne) from refinery to market.
Supply disruptions - Any event which slows or stops production of gasoline for a short time, such as planned or unplanned refinery maintenance, can prompt bidding for available supplies. If the transportation system cannot support the flow of surplus supplies from one region to another, prices will remain comparatively high.
Competition in the local market - Competitive differences can be substantial between a locality with only one or a few gasoline suppliers versus one with a large number of competitors in close proximity. Con-sumers in remote locations may face a trade-off between higher local prices and the inconvenience of driving some distance to a lower- priced alternative.
Environmental programs - Some areas of the country are required to use special gasolines. Environmental programs, aimed at reducing carbon monoxide, smog, and air toxics, include the Federal and/or State-required oxygenated, reformulated, and low-volatility (evaporates more slowly) gasolines. Other environmental programs put restrictions on transportation and storage. The reformulated gasolines required in some urban areas and in California cost more to produce than conventional gasoline served elsewhere, increasing the price paid at the pump.
The relative pricing has changed dramatically. The Midwest and Northeast consumers are being "pumped" for more money. Yet, demand is dramatically down and so are oil prices.
Do we have our own "Putin" controlling things? The Midwest and Northeast are beginning to feel like Europe does about natural gas.Or is it just history repeating?
Published: June 28, 2000Midwest gasoline prices continue to defy the market economics... just as they did 8-1/2 years ago... explanations and excuses notwithstanding.
Energy Secretary Bill Richardson said today that Midwest gasoline prices were still too high and that the Clinton administration was working to alleviate refinery problems and investigating oil companies for ''potential price fixing.'' Gasoline at the pump has fallen 7 to 12 cents a gallon in the Midwest the last week. Before last week, gasoline prices had surged for eight straight weeks.
In western New York, a state legislator wanted to have consumers boycott Sunoco which is the dominant player in an area of especially high relative gasoline prices:
Updated: 12/17/08 02:41 PMThe real problem is identifying which companies are the dominant players because of the variety of independents that get their gasoline from the majors.
Boycott of Sunoco urged by legislator
LOCKPORT — Niagara County Legislature Vice Chairman Clyde L. Burmaster called Tuesday for a boycott of Sunoco gasoline by local governments and citizens to protest high local gasoline prices.
Burmaster, R-Ransomville, sponsored a resolution that passed two weeks ago to ask for a state investigation of local gasoline price gouging. Sunday, The Buffalo News revealed that prices here are high because Sunoco, the dominant gasoline supplier in the region, is trying to make up for profits lost when crude oil prices were at record highs earlier this year.
In a speech at Tuesday’s Legislature meeting, Burmaster said, “As in the Old West, it is time for the vigilantes to ride. . . . Why don’t people want to move to Western New York or Niagara County? Is it too expensive to live here? Go ask Sunoco.”
He said residents should call Sunoco at (800) 786-6261 to protest prices and should call Gov. David A. Paterson’s local office at 716-847-7968 to ask him to respond to Burmaster’s resolution asking for an investigation.
I suspect, however, that in the Detroit area, Marathon sets the pace because they have a local refinery. Tough to verify, however. It could be argued that Marathon's refinery expansion is affecting this area's pricing [cover costs, etc. etc.]... but that would be tough to verify, too.Perhaps this is a case of not having a local refinery increases gasoline prices and having a local refinery increases gasoline prices. Heads, I win; Tails, you lose.