Have you ever wondered why gas will cost you $4.19 in downtown Batavia while guzzlers in Henrietta are paying $3.67—real prices from last week? Well folks, it's called "zone pricing," and it's another example of why we read lines such as these in the New York Times: "By any measure, Exxon Mobil's performance last year was a blowout." That's from an article this past February, written after the oil giant recorded the highest profit for any company ever. Broken down, the $404 billion in sales translated to a profit of $1,287 for every second of the year in 2007, according to the Times. In case you're wondering, every second of the year, Exxon Mobil earned several hundred dollars more than a minimum wage worker earns in a month. So you know, there are 2,592,000 seconds in a month.
While those staggering inequalities probably won't change any time soon, the state is taking a small but significant step in evening out the playing field of hometown gasoline sales. Tom Wanamaker writes in an article that appears in today's Daily News that the state senate passed lesgilsation yesterday that would "outlaw zone pricing of gasoline." The bill which sailed through the assembly and senate awaits the governor's approval.
Zone pricing is a technique used by petroleum wholesalers in which they determine prices based upon the demographics of the region.
Sen. James Alesi explains zone pricing this way:
"If one area typically is more affluent than another ... the price per gallon determined by the wholesaler, at which gasoline is offered for sale to the retailers may be slightly higher in that area, than an area where the clientele is primarily a working class neighborhood."
New York's North Country Gazette interprets zone pricing slightly differently:
Petroleum companies use "zone pricing to determine geographical price zones based on the demographics of a certain area. For example, in areas where competition is limited, wholesalers will charge a higher per gallon tank price to retailers. Gas retailers who are charged more then pass those increased costs onto the consumers at the pump, in many cases affecting those who are least able to pay.
So, one source figures the phenomenon as affecting the affluent, another decries it as a means of further extorting the poor. Whichever is more accurate, in a time when gas prices are already prohibitive for many, the technique of zone pricing just shouldn't exist.
To learn more about the bill, visit the state assembly Web site.