I drove to Louisville, Ky to visit my sister and mother during the July 4 weekend. The EIA tells me that gas prices should have been around $3.61 per gallon ("Midwest" includes Kentucky and Tennessee).
However, in Louisville the price was almost $4 gallon. I filled half a tank on Sunday and drove south. By the time I had a quarter tank and ready to fill up the price was about $3.50. Now, on average I probably paid about $3.61 but what explains those differences? Here is what the local news had to say:
Louisville's gas prices are frustrating enough -- perhaps even more so when you see places just outside the city selling it as much as 60 cents a gallon less. If you're wondering why, you're not alone.
WDRB News found out why that is, and the reason it will likely stay that way.
Many assume that it is price gouging, but the attorney general's office, which started looking into the phenomenon several years ago, determined it's the result of a monopoly.
"I know that a lot of Louisville residents, myself included, noticed that it's always about 30 cents higher in Louisville," Allison Martin, with the Kentucky attorney general's office, said. "A lot of that has to do with the reformulated gas that the EPA makes bigger cities use."
Attorney general Jack Conway also found a few more reasons for the price differences.
"A bigger issue across the state is that there is one supplier of gasoline at the wholesale level and that is Marathon Oil," Martin said. "And we believe that when Marathon and Ashland merged in the 1990s . . . that created a lack of competition at the wholesale level in Kentucky." ...
But don't expect any changes. Martin said the attorney general's office has completed its investigation and didn't find anything criminal, though it does question the lack of competition in the market. ...
Martin said Conway refused to take no for an answer and with a new chairwoman onboard at the FTC, the merger is being reviewed again. ...