Local Gasoline Prices

This story (subscription) by Rosalie Rayburn questions why New Mexico’s gasoline prices are mostly higher than in other states. She misses the main reason: gasoline in not a fungible commodity because of EPA rules. Refineries must produce gasoline with specific formulations for specific areas, thereby eliminating the possibility of transport from one region to another when there is increased scarcity in a region such as NM:

Presently, the motor fuels industry has to separately refine, transport, and store as many as 18 different so-called boutique fuels for different markets. Some of these blends are more expensive to make, and the logistical burden of having to simultaneously provide all of them adds to costs and causes localized shortages and price spikes.

Higher prices result when when gasoline becomes relatively more scarce compared to other regions. You can be sure that refineries would have plenty of incentive to transport more gasoline to NM absent the EPA rules.
BTW: I spent the first weekend in December in Tucson and the second weekend in Cincinnati. My first hand observation is that Albuquerque’s average gasoline price is roughly 10 cents per gallon less than in those two cities.

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