I went looking for information on cheap gas prices for Boise, and I found this web site that is part of the GasBuddy network. It allows you to map and search for the lowest gas prices. How does it know the prices of gasoline? Readers email the prices when they gas up. Why would they do that? Because you get entered in a drawing for free gasoline when you supply price information to them. A clever way to get a distributed army of data gatherers!
It does give you some idea of the efficiency of free markets to see that while there are definite price differences within a city, the differences are not huge. This map covered all of Boise and out to Eagle and Meridian, and there was only an 18 cent per gallon difference in premium prices--and the vast majority of the stations are only a two to three cent per gallon difference. (The Corvette only typically takes about 15 gallons, so it does not make sense to drive five miles to save eight cents a gallon.)
The information is interesting for sure. One thing I notice is a lot of stations aren't listed. Based on my own observation from simply driving all around town and observing the prices I would agree there generally isn't much variation and the most expensive locations in town aren't substantially higher (in most cases).
ReplyDeleteI would tend to agree it does prove that the stations keep their prices based on their competitors for the most part. I believe it is pretty well documented that the stations aren't really making that much profit on the gas (though I do have to wonder when oil prices drop and gas prices do not--or tend to do so very slowly, but when they go up they don't waste time raising the price at the pump). Stations make their major profits from the over-priced convenience store merchandise.
Does it prove that the free market is at play with respect to the price the stations pay for the fuel? Of that I'm not as certain. Perhaps the oil companies and refineries have some control on their pricing independent of the "market" or they set the "market." Idaho has a limited supply for gasoline (as I recall there is basically a single refinery over in, I believe, Utah, that is the main supplier of Idaho fuel from which the stations (or at least the majority) get their fuel. Perhaps there is some market manipulation of prices before the stations buy the fuel....
At least the prices have stabilized and remained flat for the last month or so. The idea of $5+ gas is scary! Don't see how the economy can survive that...