New York’s Zone Pricing Ban Not Eliminating Retail Gasoline Price Differences

Michael Giberson

At least some retail gasoline consumers in New York expected that the zone pricing ban implemented last year would tend to equalize retail gasoline prices in an area. Rochester TV station WHEC discovers that a year after the law was signed by the governor, and about 10 months after the zone pricing law went into effect, that gasoline prices in suburban Rochester still vary substantially. WHEC reports that consumers don’t like the price variations and believe the law is not working as intended.

The problem, according to Bill Adams, who owns two area stations and represents the state retail gasoline dealers association, is that the law passed last year applies only to middlemen who buy from refiners and sell to retail stations. The law does not apply to refiners distributing gasoline to affiliated retailers, nor to retail stations that buy directly from refiners. The New York state assembly has passed an amendment to the law that attempts to cover this gap, which the governor says he will sign, but the New York state senate has not acted on the law.

Of course retail gasoline stations remain relatively free to set their own prices, and would continue to have the freedom under the proposed amendment.  Even if the state can limit the pricing flexibility still enjoyed by some middlemen, there is no guarantee that the changes will eliminate price differences within a region, and no reason to believe it would.

(SEE ALSO: Earlier zone pricing posts at Knowledge Problem.)