Gasoline Price Changes - Federal Trade Commission

$ Bans on Self-Service Sales Appear to Raise Gasoline Prices.
THE DYNAMIC OF SUPPLY, DEMAND, AND COMPETITION
New Jersey and Oregon ban self-service sales, thus requiring consumers to buy gasoline
bundled with services that may increase costs – that is, having staff available to pump the
gasoline. Some experts have estimated that self-service bans alone cost consumers between
$0.02 to $0.05 per gallon.
$ Bans on Below-Cost Sales Appear to Raise Gasoline Prices.
About 11 states have a type of below-cost sales or minimum mark-up laws, which
typically either prohibit a gas station from making sales below a certain defined cost or require a
gas station to charge a minimum amount above its wholesale gasoline cost. These laws are
likely to harm consumers by depriving them of the lower prices that more efficient (e.g., high
volume) gas stations can charge.
$ Differences in Vertical Relationships Influence How Gasoline Arrives and Is Sold at
Retail Stations. The Relative Importance of Different Distribution Systems Varies from
Region to Region Across the Country, with the West Coast Showing a Relatively High
Degree of Integration Between Refining and Marketing as Compared to Other Regions.
The degree to which one company will perform all or only some of the steps involved in
refining and marketing gasoline varies among companies. A refiner that is integrated with its
own distribution system may set up a direct distribution system under which it supplies gasoline
to (1) retail sites that it owns and operates, also known as “company-owned-and-operated
stations;” (2) retail outlets that are owned by the refiner, but operated by independent lesseedealers;
and (3) retail outlets that are owned and operated by independent “open” dealers that sell
company-branded product. An integrated refiner’s wholesale price for company-owned-andoperated
stations is a non-public, internal transfer price. When an integrated refiner supplies
retail outlets owned by the refiner but operated by independent lessee-dealers, or owned and
operated by independent “open” dealers, it charges the “dealer tank wagon” (DTW) price to the
dealer.
Alternatively, an integrated or independent refiner may use a jobber distribution system.
A jobber, which may be brand-name, unbranded, or both, 7 buys gasoline at the terminal rack and
then delivers the gasoline to (1) stations that it owns and operates; (2) stations that it owns but
leases to third parties; and (3) stations that are independently owned and operated. 8 Jobbers pay
a “wholesale rack price” for their gasoline purchases, although other contractual terms may also
affect the net price. Jobbers may switch brands if alternatives are available.
Compared to the nation as a whole, the Midwest, the Gulf Coast, and the Rocky
Mountain states distribute more wholesale gasoline at the rack through jobbers than through
DTW sales or internal transfers. The East Coast also distributes the majority of its wholesale
gasoline at the rack through jobbers, although DTW sales have more importance in the New
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