Retail gasoline pricing

Dan Davis is the president and CEO of DataStream Market Intelligence, Inc. headquartered in Owasso, Okla. DataStream's primary focus is on data collection and market analysis. It also provides Mystery Shopping programs, Market Area Studies and Mapping for retail locations throughout the United States. Dan received his B.B.A. in Finance and Marketing at the University of Texas in Austin.

Web: www.DS-MI.com

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Recent Questions:

1) Why do gasoline prices typically spike in the summer?
The over simplified answer to this question is supply and demand. Motor gasoline and crude oil stock levels going into the season are a good indicator of where prices will be headed. Going into this summer we experienced the after effects of war and refinery stoppages. This disrupted oil shipments to the United States causing our domestic crude supply to decrease. In addition, due to a harsher than normal winter we were forced to focus more heavily on heating oil and diesel fuel.

2) What regions or cities in the US have typically higher prices than the average? Why?
California gasoline prices are typically higher for a number of reasons: they have an above average tax rate, the West Coast is relatively isolated as far as getting product to the market, and they have strict environmental standards. California's phasing out of MTBE with ethanol-based product will only add to the problem. Ethanol will have to be transported by rail or truck. Transporting by pipeline can expose it to water or water vapor and it may make the gasoline unusable. Also, the associated costs of storage, shipping and blending of Ethanol will ultimately be passed on to the consumers.

3) What's the largest jump in price in any given market that you've seen?
The largest price jump that I have ever seen was in the Detroit market. It was the day after the tragedy of September 11th. I received a report that a particular store actually raised their price $1 per gallon from the previous day!

4) What market has seen the least price fluctuations in the US over the last year?
Some markets experience gradual price moves overtime and others tend to be more volatile where they increase by as much as 10 cents to 15 cents on any given day (Detroit and Tulsa to name a few). What I have found that I find more interesting is that at a time when prices on average are higher around the country there are areas that have actually seen price decreases since last year. Some areas in Florida are showing 6.7 to 15 cent price reductions.

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