One of these days, I would love to get a look at the algorithms used by petrol dealers to set prices.
Before the gas price run up of the last couple of years, Connecticut was one of the most expensive places on the east coast to buy gas. We were on par with Sacramento, a little cheaper than San Francisco and New York, and incredibly more expensive than New Jersey, Missouri, and Georgia. Within the Hartford metro area, the closest gas stations to the house priced at about the median of the metro area — more expensive than along the Berlin Turnpike, but cheaper than in Avon and Simsbury.
Pre-Katrina, some of those dynamics had started to change. I’d heard that California had become much more expensive than CT, and prices were not tremendously different between CT and MO and NJ. However, within the Hartford metro area, the 20 cent spread between Berlin Turnpike and Simsbury still held.
Post Katrina, the landscape has changed entirely. CT currently has gas prices cheaper than can be found in Georgia and Alabama, for example. And, within the Hartford area, the prices along the Berlin Turnpike are similar to those in Avon and Simsbury…but the airport gas stations (my neighborhood petrol stops) are running 10-15 cents a gallon higher.
While changes in regional relationships are easily imaginable given differences in fuel mix, regional supply pressures, etc….the local changes are puzzling. I can’t help but wonder if there’s also a price/demand-elasticity component to the equation, one that once prices spike up, there is within the neighborhood a less-flexible-than-average demand level that incents dealers to not recognize a drop in costs.
Jus’ something interesting to ponder….