Why Is Gas So Much Cheaper In Tucson Than Phoenix?

West-coast-gas-pricesTucson, Arizona currently has some of the cheapest gasoline in the nation. As of July 25th, it is a bargain (relatively speaking, of course) at $3.78 per gallon, according to Gassbuddy.com. Yet only a two-hour drive away in Phoenix, the average price is nearly 20 cents higher, averaging $3.96 per gallon, which is on par with the national average. Initially transportation costs seems like it could explain the differences; perhaps Tucson is connected to some main petroleum artery that crisscrosses the United States, while Phoenix is still relying on some derivative of the Pony Express. Yet this is not the case. The two cities are served by the same pipeline, and have sufficient holding tanks to keep demand under control. So how could two cities that are demographically similar and located in the same state have such different gas prices?

It turns out that geography plays a major role in determining gasoline prices. According to NPR, Phoenix suffers from much worse air quality than Tucson, a malady largely attributed to its geographical situation and compounded by the sheer size of the city (which in the 1990s became the fifth largest in the country). Because of this, the city is required by the EPA to sell a cleaner-burning fuel, which happens to be more expensive. Tucson, on the other hand, doesn’t suffer the same pollution problems as Phoenix, and as a result is allowed to sell the cheapest (and dirtiest) gasoline on the market. Mixing this fuel with government-subsidized ethanol helps to further lower the price of gasoline in the city.

The gas prices in Tucson and Phoenix demonstrate how demographics and geography can interplay in often surprising ways. In this case, Phoenix drivers pay a 20 cent per gallon premium at the pump because of a combination of environmental factors, a situation I’m sure the residents of Phoenix weren’t anticipating when the region first began to grow. As for me, living in a city where regular old unleaded gasoline is currently being hawked at $4.45, I think I'll just take the bus.

Labels:

Subscribe to NuWire's free weekly investment newsletter:
  
Your information will not be shared

1 comments:

July 28, 2014 at 10:38 PM Anonymous said...

Do research before acting like the simple minded Phoenician. You cant have "dirty gasoline" we in Tucson don't have a nasty over populated ex-Californian and ugly population. There is a pipeline that starts here and splits to your nasty brown cloud of a city. Please tell your fellow crank heads that Tucson is nasty and we hope you never visit!

Post a Comment

Home

© 2012 NuWire Investor and NuWire, Inc. All Rights Reserved.