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Why Gasoline Prices Differ from Region to
Region
Although price levels vary over time, energy
information administration data indicate
that average retail gasoline prices tend to
typically be higher in certain states or
regions than in others. 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 U.S.) ten 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 a refiner to market.
Supply disruptions: Events that slow or stop
production for a short time, such as
refinery maintenance, can prompt bidding for
supplies. If the transportation system
cannot support the flow of surplus supplies
from one region to another, prices 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. Consumers 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
toxins, include the Federal and/or
State-required oxygenated, reformulated and
law-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.
Operation costs: Even stations located
adjacent to each other have different
traffic patterns, rents and sources of
supply that influence retail price.
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