Thursday, August 30, 2012

Only one explanation for high gasoline prices

I have resisted the temptation to get involved, but after several weeks of tracking prices and listening to complaints, I do declare, well … something’s rotten in Tuscarawas County.

Yep, it’s true that gasoline prices in the Dover-New Philadelphia area, if not in all of Tuscarawas County, are unreasonably high for no apparent reason.

I am not breaking new ground here by declaring that prices are higher in good old T-County. I swear I used to write about the unreasonable gasoline prices in Tuscarawas County back when I controlled a particular editorial page. You know, back in the days before Gas

Gas, if you don’t know, is a website that tracks gasoline prices with the help of those people who are visiting gasoline stations around the country. The prices are updated constantly and the site provides a list of stations offering the cheapest gasoline in town no matter where you are.

Gas Buddy is now a popular iPhone app and one that I rely on quite frequently. I’ve been tracking prices in Dover-New Philadelphia, Canton, Cambridge and South Bend, Ind., as part of my gasoline price “investigation.”

Why South Bend? I don’t know. I usually need gas there when I’m driving to Chicago, so I just thought I’d throw it in. South Bend isn’t cheap either, although I found prices there cheaper than in T-County on more than one occasion and not just at one of those rogue gas stations that have funny names.

Anyway, on Monday, regular gas was priced at $3.90 (I’m rounding to the nearest penny) at the Speedway stations in Dover, while one could find it for $3.65 just about anywhere in Canton. In Cambridge, at the Pilot near I-70, you could buy regular unleaded for $3.60.

Pilot, whose owner just bought the Cleveland Browns, obviously is trying to get in good graces with the local fans, which is OK by me.

South Bend prices were similar to Dover prices, so don’t worry about having to drive there for a deal.
So, I hunted for answers to the question, “Why are gas prices higher in some cities than in others?” and these are the answers I came up with:

--Wiki “Because of the amount of oil available around that area. If it’s, for example, near a huge amount of oil, the price could be cheaper than near areas where there are no oil refineries. It also may depend on the gas station’s view on what they want to price their oil.” (Science Channel):  “In the U.S., some areas are known as gasoline-market islands. These regions include California and the Midwest, and have unique clean-burning requirements for gasoline. Not all refineries can produce these special fuels. The prices rise due to limited supply and high demand, and can spike in the case of an issue at the refinery or a pipeline problem.”

--U.S. Energy Information Administration: “Pump prices are often highest in locations with few gasoline stations. Even stations located close together may have different traffic patterns, rents, and sources of supply that influence their pricing. Drivers face a trade-off between stations with high prices and the inconvenience of driving further to find a station with lower prices.”

And you thought the Internet was a wealth of information.

A long time ago, I asked a friend in the fuel business why the oil companies raised gasoline prices for no apparent reason.

“Because they can,” he said.

That was it. There was nothing else. No elaboration.

“Because they can.”

Of course. Why didn’t I think of that?

I tend to believe that simple explanation rather than the more complicated ones involving econometrics – defined as the “unification of economics, mathematics, and statistics” – which are used to help price commodities such as fuel and are mined routinely from your use of credit and debit cards. Surprise!

I suppose if all the folks in Dover and New Philadelphia are irked enough they could make phone calls to the attorney general, alleging the oil companies are engaging in price fixing in the area. That might help, although the oil companies, no doubt, will bring out the big guns – the econometrics guys – who will bore the judge/jury to death with a lot of numbers.

Or local motorists could conserve enough fuel to allow them to drive to Canton to fill up at a cheaper rate minus, of course, the cost of the gasoline to get there.

Bottom line? I think you know.

Follow me on Facebook and Twitter (dfarrell_dover)

No comments: