Gasoline Price Changes - Federal Trade Commission

GASOLINE PRICE CHANGES:
high-volume gasoline sellers in San Francisco. The study also noted that “zoning and other
regulations make it harder for station owners in San Francisco to operate convenience stores on
the same property as gasoline stations and therefore [these regulations] eliminate profitable
secondary sales.” 7 In regions such as San Francisco, with high land prices and strict zoning
regulations, entry by new competitors tends to be more difficult than in areas that lack those
factors.
B. The Growing Role of Convenience Stores and Hypermarkets in Gasoline
Sales May Lower Prices.
Differences in local retail prices may occur not only because of different numbers and
density of gas stations within a vicinity, but also because of differences in the types of retailers
selling gasoline in particular areas. Gasoline retailing in Northern California offers an
illustration of how retail prices diverged between neighboring regions when one area evolved
toward a high-volume, low-cost retail format, while the other maintained a more traditional
format. The entry of high-volume discount stations and hypermarkets in one California county
appears to have lowered retail gasoline prices there. Hypermarkets are large retailers of general
merchandise and grocery items, such as Wal-Mart and Safeway, that have begun to sell
gasoline. 8
1. Examples suggest that hypermarket competition tends to lower local
retail gasoline prices.
During late 2002 and early 2003, a number of local news articles drew attention to
increasing gasoline price differences between Siskiyou County, California, and its neighboring
counties of Shasta and Butte. 9 Figure 5-3 compares annual average retail prices for regular
grade gasoline in Siskiyou County with prices in the city of Redding in Shasta County from 1998
to 2003.
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FEDERAL TRADE COMMISSION, JUNE 2005