I am disgusted, sick to my stomach even, when I look at this map from GasBuddy.
And painfully envious when I look at this one.
My current residence is in Berkeley, but home is and will always be New Jersey. Driving by the gas station just the other day, I found myself wide-eyed with horror, gaping at regular pump prices upwards of $4.00. It seems utterly unjust that I should have to pay these astronomical prices, while my fortunate friends on the East Coast can enjoy their marginal victory in the triumphant form of a Wawa sub and iced tea with cash leftover (16 avg tank*(3.79-3.19) lowest prices– 4.79 sub– 1.59 iced tea= $3.22). Whatever happened to fairness? Why, in fact, do California drivers pay so much more?
It is clear that multiple distortive forces are at work here. But these are not unique forces to our time, not even close.
Why do gasoline prices differ according to region?
Although price levels vary over time, Energy Information Administration (EIA) data indicate that average retail gasoline prices tend to typically be higher in certain States or regions than in others. Aside from taxes, there are other factors that contribute to regional and even local differences in gasoline prices:
- proximity of supply
- supply disruptions
- competition in the local market
Why are California gasoline prices higher and more variable than others?
The State of California operates its own reformulated gasoline program with more stringent requirements than Federally-mandated clean gasolines. In addition to the higher cost of cleaner fuel, there is a combined State and local sales and use tax of 7.25 percent on top of an 18.4 cent-per-gallon Federal excise tax and an 18.0 cent-per-gallon State excise tax. Refinery margins have also been higher due in large part to price volatility in the region...California prices are more variable than others because there are relatively few supply sources of its unique blend of gasoline outside the State.Supplies could be obtained from some Gulf Coast and foreign refineries; however, California’s substantial distance from those refineries is such that any unusual increase in demand or reduction in supply results in a large price response in the market before relief supplies can be delivered. The farther away the necessary relief supplies are, the higher and longer the price spike will be...
Paul Erdkamp's The Grain Market in the Roman Empire points us to Cicero, who writes of the system by which provinces could contribute money instead of grain to Rome.
In Verres 126.96.36.199:
Video quid inter annonam interesse soleat, video quot dierum via sit, video Philomeliensibus expedire, quanti Ephesi sit frumentum, dare potius in Phrygia quam Ephesum portare aut ad emendum frumentum Ephesum pecuniam et legatos mittere. In Sicilia vero quid eius modi est?..[I]sta ratio aestimationis in Asia, valet in Hispania, valet in iis provinciis in quibus unum pretium frumento esse non solet: in Sicilia vero quid cuiusquam intererat quo loco daret? neque enim portandum erat, et, quo quisque vehere iussus esset, ibi tantidem frumentum emeret quanti domi vendidisset.
I am aware what is the customary difference between the prices of grain. I am aware how many days the journey takes. I am aware that it benefits the Philomelians to pay as much as the grain is worth at Ephesus in Phrygia rather than to bring grain to Ephesus or to send messengers and money to buy it there. But what is there of this kind in Sicily?...This logic of value works in Asia, works in Hispania, and works in those provinces in which there is not a single customary price for grain; in Sicily, however, who cares where one pays? For the grain does not need to be transported, and whither anyone should be ordered to convey it, there he could buy the same amount of grain for the same price as he had sold it at home.
Much as today, there were powerful forces altering the cost of an everyday commodity, here grain, across various provinces in the Roman Empire. The costs of transportation played a major role, and thus larger differences across larger provinces. In addition, the implications of Cicero's accusation---that Verres is greedily subjugating his people to an unfair and illogical system resulting in coin contributions, presumably which make it easier for him to rob Sicily blind---are additional market distortions at Rome. The “disappearing” grain from Sicily would decrease supply and inflate market prices for the ordinary citizens of Rome.
And so the commodity price gap can be explained by similar factors today; it is the effects of governmental (legal though, like taxation) and market forces.