Wednesday, August 17, 2005

Gas Yet Again

Contrary to previous excursions, gas prices today seemed more consistent. $2.70 all down East Washington Avenue (where I bought gas), and $2.80 all down University Avenue (except for one on Old University Avenue, the Freedom station, which was at $2.70 for regular gas).

Things to note: Ten cents a gallon is rather a lot, and you normally expect the higher gas prices in poorer neighborhoods, because there is the greater cost of petty theft, yet East Wash. is much poorer than University Av.

Score one for the law of one price seeming to hold today, but still odd why three of four stations on University Avenue I drove by had gas prices ten cents higher than elsewhere in the city. This in/consistency points to things in the contracts driving the price discrepancies, rather than strategic behavior, or so I think.

4 Comments:

Blogger henry said...

you normally expect the higher gas prices in poorer neighborhoods

I thought the conventional wisdom was that it was exactly the opposite. The more you make, the more value time has, and so you will go to the gas station closest to you even if the price is higher than the average.

10:49 PM  
Blogger Isaac said...

True. But the cost of providing services in poorer neighborhoods is higher because of petty theft/vandalism etc. At least this is true of grocery stores in New York: stores in poorer neighborhoods are more expensive than equivalent stores in richer neighborhoods (or so my older sister tells me).

11:14 PM  
Blogger henry said...

Yes, more people probably drive away without paying and so forth. But when the gas station makes their pricing decision costs shouldn't really be factored in. They have alrady made all their production decisions, the price is set to get as much revenue as possible.

10:28 AM  
Blogger Isaac said...

Good point.

2:46 AM  

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