Gasoline Price Changes - Federal Trade Commission

GASOLINE PRICE CHANGES:
$ Since 1992, Annual Average Real Retail Gasoline Prices, Excluding Taxes, Have Risen
up to $0.14 Higher in the Rocky Mountain States, and up to $0.25 Higher on the West
Coast, than in the Gulf Coast, the East Coast, and the Midwest Regions, Where Prices
Tend to Be Within a Few Cents of Each Other.
The timing of the price changes – see Figure 4-11 – suggests they may bear some
relationship to the introduction of Phase I (1992) and Phase II (1996) of the stringent and
specialized CARB requirements for gasoline sold in California. CARB has required cleaner and
more expensive gasoline than in other states, so increased gasoline prices on the West Coast may
reflect increased production costs, to some extent. In addition, only a limited number of
refineries outside California produce CARB gasoline, which limits substitute gasoline supplies,
and thus raises costs in the event of a supply shortage.
The same trend toward higher prices appears in the Rocky Mountain states, however,
where environmental requirements are less restrictive, and therefore suggests other possible
sources of higher prices. The Rocky Mountain states’ limited access to pipeline connections to
alternate sources of gasoline contrast with the extensive pipeline connections of the Midwest and
East Coast and therefore may contribute to these price differences.
xii
Price (Cents per Gallon)
180
160
140
120
100
80
60
40
20
0
Source: EIA, BEA
Figure 4-11: Annual Average Real (2004 Dollars) Gasoline Prices, without
taxes, PADDs III, IV, and V (1996-2004)
PADD III: Gulf Coast
PADD IV: Rockies
PADD V: West Coast
1996 1997 1998 1999 2000 2001 2002 2003 2004
FEDERAL TRADE COMMISSION, JUNE 2005