Gasoline Price Changes - Federal Trade Commission

3. Gasoline prices in the East Coast (PADD I), the Midwest (PADD II), and
the Rocky Mountain states (PADD IV) are significantly more variable
than Gulf Coast gasoline prices ................................................................ 94
4. Differences in access to pipelines and substitutable gasoline supplies
appear most significant in explaining these differences in the variability of
gasoline prices in different locations in the U.S. ...................................... 95
5. Conclusion ................................................................................................ 97
CHAPTER 5: STATE AND LOCAL POLICIES, AS WELL AS THE EXTENT OF
VERTICAL INTEGRATION AMONG FIRMS, CAN AFFECT RETAIL
GASOLINE PRICES ................................................................................... 103
I. LOCAL FACTORS CAN AFFECT RETAIL GASOLINE PRICES ...................... 103
A. Other Things Being Equal, Retail Gasoline Prices Are Likely To Be Lower When
Consumers Can Choose, and Switch Purchases, Among a Greater Number of Gas
Stations................................................................................................................ 103
B. The Growing Role of Convenience Stores and Hypermarkets in Gasoline Sales
May Lower Prices............................................................................................... 106
1. Examples suggest that hypermarket competition tends to lower local retail
gasoline prices......................................................................................... 106
2. Retail gasoline sales reflect four important national trends.................... 108
C. Government Regulations Can Affect Retail Gasoline Prices ............................. 110
1. State and local taxes can be significant factors in the retail price of
gasoline ................................................................................................... 111
2. Regulations regarding the methods stations may use to sell gasoline can
influence the retail price of gasoline....................................................... 113
II. DIFFERENCES IN VERTICAL RELATIONSHIPS INFLUENCE HOW
GASOLINE ARRIVES AND IS SOLD AT RETAIL STATIONS......................... 114
A. Terminaling – Storage of Bulk Supplies of Refined Petroleum Products .......... 115
B. Wholesaling ........................................................................................................ 116
III. VERTICAL INTEGRATION IN GASOLINE MARKETS: THEORY, EVIDENCE,
AND TRENDS ......................................................................................................... 118
A. Vertical Integration May Be Cost-Effective for a Firm...................................... 119
1. Reduce transactions costs ....................................................................... 119
2. Prevent opportunism by contractual partners ......................................... 119
3. Eliminate double markups ...................................................................... 120
4. Eliminate distortions of input choices..................................................... 120
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