Thursday, November 29, 2007

Gas Pricing Update

I had noted here here and here that gas prices seemed out of whack at two adjacent gas stations. Over the past few weeks, the prices of regular gas did indeed converge: from 3.19 vs 3.16 to 3.21 vs 3.23 and today 3.25 vs 3.25. It took a lot longer than a model of oligopolistic pricing would have predicted.

I'm starting to keep an eye on two gas stations down the road that have the same owner - a Shell and a Sunoco. The price of regular gas at the Sunoco was 3.19 and at the Shell was 3.26.

Perhaps I have it all wrong and the model I should be thinking of is a product differentiation with different pricing strategies to segment the market. But then again, perhaps gas is gas any where and everywhere.

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