Professor Mark J. Perry's Blog for Economics and Finance
Posted 8:21 PM Post Link
That is an extraordinary price . . . encouraging too. Can someone in these Carpe Diem forums explain why prices can vary so markedly across states?It can't just be transportation costs, can it?Michael Gordon, AKA, the buggy professor
Well, that's a full 25 cents below any other price, so my own observation would be that it's a promotional price. It's still good, and $3.29 seems to be common, which is about a 90 cent differnce from only 3 months ago where I am (still notably above 3.29, here, though, mind you)I assume a large part of the difference is state and local taxes, plus proximity to refineries. Any pump price has to include transport expenses, and many states (Florida, for example, which has a lot of tourists) all use different taxation measures for revenue inputs.
New Albany, MS is about half way between Memphis and Birmingham, so it is a natural stopping point for a lot of trucks on that route. They're not the only truck stop in New Albany fighting for that traffic.The truck stop has a restaurant and pool hall and other conveniences, so they are probably trying to drive up inside sales, as selling gas is not near as profitable. Transportation costs come into play as it is relatively close to the gulf. Discounts for volume, etc. Taxes are also important. MS taxes gas at 18 cents per gallon. NY taxes 31.9 cents. Kansas - 24 cents. California taxes at only 18 cents per gallon plus 6% state sales tax plus 1.25% county sales tax plus local taxes plus 1.2 cents per gallon UST fee.
Yeah, but that's Mississippi, a state with one of the worst education ratings in the country. How do we know they just didn't add the numbers up correcly?;-)
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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