Wednesday, May 03, 2006

Gasoline Price Fixing?

I have seen several news broadcasts lately where several high ranking politicians who have been demanding an investigation into the possibility of price gouging involved with the recent dramatic price increases in gasoline.

The Ayn Rand Institute has an informative article called The Myth of "Price-Gouging".

I don't really worry about price gouging. What I want to know about is price fixing.

There have been a lot of people in Ridgecrest for many years asking why our gas always seems to be some of the more expensive gas in the state. The next question people ask is why do all the stations in town charge the same price for gas. When one station raises it's price everyone else follows shortly.

There have been "investigations" in town before and they always conclude that there is no formal price fixing going on in town.

Using the information at California Gas Prices I was able to gather the following information:

Ridgecrest has 14 gas stations with the prices ranging from $3.34 to $3.39. If you drop out the one low station at $3.34 and the two high stations at $3.39, the other 11 stations in town are all charging the same price - $3.35.

But I'm sure thats just a coincedence.

Ignore the fact that a quick check of six other cities of about the same population as Ridgecrest shows:









City
Ridgecrest
Blythe
Eureka
Lemoore
Lincoln
Suisun City
Paradise
Population
25000
22000
26500
22500
22400
27300
26500
No. Stations
14
8
18
7
7
13
6
High Price
3.39
3.55
3.49
3.29
3.25
3.29
3.19
Low Price
3.34
3.13
3.30
3.16
3.18
2.99
3.09
Range
0.05
0.42
0.19
0.13
0.07
0.30
0.10

If you drop the high and low price stations from the mix, the shortest range of price differences you find is Lincoln which drops from 7 cents to 5 cents. The rest of the cities have ranges that run from 6 cents to 34 cents. None of them get close to Ridgecrest's range of zero.

Wow? 11 stations in town all charging the exact same price, with the other 3 stations within 4 cents. That's right, there's no price fixing going on here.

3 comments:

Will Brown said...

To really make your case David, you'ld need to identify the (number, at least) of gas wholesalers that supply the local stations. I think I recall it being a topic of mild concern back when that there are/were only two serving the area, basicly from Mojave right up to Bishop. If that's still the case, then there's your culprit. The stations charge the same price because they all pay the same price to their supplier.

David said...

I would certainly try to find out who supplies all the gas stations is town if I was really trying to make a case for price fixing. Mostly I'm just bitching and complaining. I don't buy into the price gouging complaints and I hate paying over $3 a gallon of gas and wanted something to rant and rave about.

The Grouchy Old Yorkie Lady said...

If it walks like a duck, and quacks like a duck...