FTC Report on Gasoline Prices:

The FTC has released its report on gasoline prices. The Press Release and link to the report (as well as Comm. Liebowitz's concurring statement) can be found here.

From the Press Release:

One of the Report's conclusions is that over the past 20 years, changes in the price of crude oil have led to 85 percent of the changes in the retail price of gasoline in the U.S., while other important factors have included increasing demand, supply restrictions, and federal, state, and local regulations such as "clean fuel" requirements and taxes.

Some interesting findings in the report(my idiosyncratic list of things I found interesting, there's a lot more in the report):

1. Increased demand for world oil supplies, especially as the result of rapid economic growth in India and China, have dramatically increased the demand for crude oil. Crude oil prices are 85% of the cost of gasoline. World demand for other raw materials that form the basis for expanded growth in developing economies, such as steel and lumber, has also risen.

2. For most of the past twenty years real average annual gasoline prices, including taxes, have been lower than for any time since 1919.

3. In some situations, environmental regulations that require the use of boutique fuels lead to increased price variability, especially in California.

4. The presence of "Hypermarket" sellers of gasoline in a market, such as Wal-Mart and Safeway, tend to reduce prices because of their lower costs.

5. In 2004, the average state sales tax on gasoline was $0.225 per gallon which increases the cost of gasoline (duh).

6. Bans on self-service sales, such as in New Jersey and Oregon, increase prices (duh again).

7. Bans on so-called "below cost" sales of gasoline appear to raise gasoline prices by chilling competition. (I commented on Maryland's vigilance in protecting its citizens from low gas prices some time ago).

The whole report is long, but well worth reading for anyone interested in this issue.

Related Posts (on one page):

  1. More on Boutique Fuels and Gas Prices:
  2. More On Gas Prices:
  3. FTC Report on Gasoline Prices:
Jessika1028 (mail) (www):
Interesting blog!
7.6.2005 12:49pm
An anecdotal aside; of course you would expect higher prices for gasoline in states that ban self-service, however, I find it amusing that many people I know hop the border from New York (and some places in PA) to get gasoline in New Jersey because they find it to be generally still cheaper.

I wonder whether they end up actually saving, since I don't believe many of them take the time to account for the gasoline they use up on the round trip out to Jersey.
7.6.2005 12:56pm
NJ gas prices are dramatically lower than the surrounding states. For 7 years, I drove from NY to Maryland and back every other weekend. I always timed my gas stops such that I filled up in NJ. Even paying higher margins on the Turnpike was cheaper than gas in NY. (Of course after 7 years, I also knew where to stop before the Turnpike to get it even cheaper.)
7.6.2005 1:05pm
Alex R:
According to this link, NJ gasoline taxes at 14.5 cents/gal are quite a bit lower than surrounding states (DE -- 23 cents/gal, PA -- 27.3 cents/gal, NY 33.55 -- cents/gal). Clearly this tax rate difference more than makes up for the extra costs of mandatory gas station attendants. (The FTC report gives a figure of 2 to 5 cents/gal as the cost of the self-service ban.)
7.6.2005 1:46pm
Nobody (mail):
NJ's lower tax on the gas itself is at least partially made up for by the stimulus (and accompanying tax revenue) provided by the need to hire people to man the pumps. As a Pennsylvania resident who works in Delaware and frequently visits New York, I too can confirm that gas is ALWAYS cheaper in New Jersey (even on the turnpike) than in PA, DE, or NY (where I have to get out and pump it myself).
7.6.2005 1:56pm
Nobody, sounds like you're making a broken window argument. It runs as follows: we should break windows because doing so employs the glass-maker and the carpenter. Never mind that if the window had not been broken the window owner would have spent his money else where (and in a more pleasurably fashion).

If you do some order of magnitude approximations, you'll discover that the cost of having attendants pump _every_ gallon of gas is essentially nil.

States without mandatory attendants have high premiums for service because relatively few people use it and those people are substantially less price sensitive.

NJ has several times considered eliminating the requirement, and yet it remains _extremely_ popular. The reason is because the economic arguments are wrong. The (extremely small) cost savings simply doesn't offset the dissatisfaction of getting out of your car in the winter (or other times).
7.6.2005 2:17pm
AK (mail):
It's worthwhile to note that the cost of full-service is much less in full-service-only states than it is in self-service states.

People who prefer not to pump their own gas make out really well in NJ and OR.
10.29.2005 8:46pm