Why gas costs more and is more profitable in the West

There is an interesting paradigm in the US gasoline market, which some refiners are learning to take advantage of for the benefit of their bottom lines. Gasoline in the western states is usually more expensive than that on the east coast, due to a more stringent standards which damned cleaner fuel. The gasoline sold in the east and the gasoline sold in the west are, in effect, two different products.

The disparity among companies comes in the facilities required to produce this cleaner gas. It is a very limited market of competition, and thus west-coast residents pay a hefty premium for gasoline, and the refiners make an even heftier profit.

With more states adopting the clean-fuel standards that came out of smog-ridden California in the 90’s, clean gas manufacturers are of an increasingly small group able to supply a tight market.

It is unlikely that we will see a national standard for clean-fuel, despite the environmental need for such a thing. Until then, Refiners in states that require specialized fuel will be pocketing those premiums.

– By: Stephen Calogera

Source: CNNMoney
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