How Does This Goleta Gas Station Get Away with Price Gouging?

UCSB graduate student Jing Xu was driving to the grocery store one day when she stopped at the Mobil gas station on Glen Annie Road and experienced the sticker shock all too familiar to western Goleta residents. The prices were high, extremely high, nearly two dollars above any other gas station in the area. “I was really surprised,” Xu said. “I thought there must be something wrong with the sign.” So she got out of her car and checked the pump. Nope, the sign was right. “How could that be?” Xu wondered.

Thus began a full-blown scientific study of why some stations charge more than others in the same geographic region, and how a few get away with blatant price gouging. Xu teamed up with geography professor Alan Murray for two weeks in 2016 to track the price of regular gasoline at 108 stations throughout Santa Barbara County, and they published their findings this January in the Asia-Pacific Journal of Regional Science. While other researchers have devoted countless studies to the global dynamics of gas pricing ​— ​how it’s affected by the cost of crude, trade markets, transportation charges, and so on ​— ​this was the first paper to focus specifically on abnormal pricing behavior in a local retail market. It was also the first to examine the phenomenon of price gouging outside of a disaster scenario.

Jing and Murray used what’s called a “spatial analytic framework” to determine how the locations of pumps might influence their prices and if there was any predictability to the cost variations. They looked at land zoning, socioeconomic conditions, and the concentration of competing stations, as well as the stations’ proximity to highways, schools, and business districts. “People are really interested in this because it’s a local issue,” said Xu, who recently presented her paper at a conference and incorporated the results ​— ​some of which were intuitive, while others were quite surprising ​— ​into her master’s thesis. Here’s what she found: