How Explosive is Gasoline This Time?


The last time I wrote about gas prices it drew a lot of attention. Many people may have missed the point, though, so I’m going to do it again. Yesterday, someone I know went to Virginia and brought back an eye witness account of the prices along the trip, and I checked them on the internet today and found them unchanged. Grand Rapids and Virginia were the same, while Hibbing was 25 cents cheaper. Most of us are fully aware that prices in Grand Rapids and Virginia are quite similar, while Hibbing is usually 15-20 cents cheaper, 25 cents today. Last time I compared Grand Rapids to Hibbing, this time I’ll compare Virginia to Hibbing. Please look at the charts, which I will refer to below:
vh1vh2vh3
First, let’s look at the population. You will see that Hibbing had nearly twice the population as Virginia.

Next, take a look at three lines where there is a dramatic difference, and which heavily impact business. In Special Assessments, Virginia collected $222,776, while Hibbing collected only $47,769. Virginia collected almost five times as much as Hibbing while having half the population. Under Licenses and Permits Virginia collected $171,809 to Hibbing’s $143,901, nearly 20% more with half the population. Moving to Charges for Services we see that the numbers are close to the same, but factoring in the population Virginia’s rate is nearly twice as high.

Go on to compare the lines showing the borrowing, debt service and total expenditures for the two cities. You will see that the per capita levels are much higher for Virginia than for Hibbing.

So how does this relate to gas prices? Grand Rapids and Virginia both have higher taxes on businesses than Hibbing, and their gas prices are also higher. At first glance some will dismiss this as coincidence, but as time goes by, the preponderance of evidence will show that there is a definite relation between higher rates of taxes and spending by local governments and higher prices, not only of gasoline, but many other things.

Higher tax rates simply mean higher consumer prices. These taxes are a cost of doing business. Costs of doing business must be passed on to the consumer, or the business will fail. Simple as that.

5 thoughts on “How Explosive is Gasoline This Time?

  1. I agree that she had no choice. Being bullied by the “big guys” leaves you with no choice. I know the guy who owed it before her and that was his explanation also. If he tried to stay lower, the big guys would just undercut him until he went under. There’s your proof.

    Did she just watched the other stations? Did she live in viewing distance to the other stations and watch their prices like a hawk? Was she constantly driving around town to wait for others to change? Why not leave your prices lower when they all changed? You’d get more business! I’d drive further to Cub if I knew they were lower. I did when they first opened before they were bullied into staying the same as everyone else. There was obviously pressure to conform.

    Like

    1. I remember when I was growing up in the 70’s and the prices were frequently different in different parts of town. I remember many times Dad drove right past Denny’s to buy gas either at M&H or at the station which preceded SA on the East side. All because gas was 2-3 cents cheaper. Aside from the price, what has changed since? Now, all but two stations are on the same street between Forest Lake and Slumberland. All of these stations have to stay awful close in price or people will simply drive a few blocks further to a different one. I accept this as a major contributing factor for these stations, but do not have enough information to speculate on the outlying stations yet.

      Like

  2. I just want someone to explain to me why ALL the gas stations in this town are ALWAYS the same price. OK, taxes make the price higher, but, there is still differences in prices in other towns from station to station (even if just a few cents). If you see one station’s prices going up, you’d better hurry to another one because you know that within 5 minutes they will all go up. Obviously someone is calling the shots on prices in Grand Rapids. One time while I was working, my business partner called me and told me that the south Holiday station raised its prices and to get to the station at Cub (when it was still there) and fill up our dump truck before the price went up there. I was filling up when, predictably, someone drove up and started changing the price. I jokingly said that they must’ve gotten “the phone call” to change the price. I got the deer in the headlights look and a half joking “what are you talking about, phone call?”. If someone tries to tell me that there is no collusion going on, they are lying. It’s blatantly obvious that the prices are linked.

    Like

    1. I wish I could explain why they are the same, but I can’t yet. I suspect that it is a simple explanation, but have no proof to offer.
      As far as to station in front of Cub, I knew the lady who ran it from day to day, and am under the impression that she simply watched the other stations and followed their lead. I do believe her explanation that their profit margin was so slim that they had little choice but to do it that way. After all, gas was their only product, and they had no convenience store to fall back on.

      Like

  3. J

    Mike, this was a very astute perspective on your part. Yes, it does appear higher cost local government does equate to a pass-through to the consumer. Nice job!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s