The Market for Petrol

The price of petrol is not something I think about much in the US.  About 2 blocks from my house there are 4 gas stations – one on each corner of the same intersection.  I know that I can (a) always get gas at any of these stations and (b) at least one of the stations will have a relatively low price for the area.

While driving across South Africa in July 2011 the petrol workers went on strike, preventing petrol trucks from leaving the depots and delivering fuel to gas stations across the country. Of course, this happened right as I was headed into the northernmost province – Limpopo Province – on a 400 km road trip.

Being absolutely paranoid about running out of gas somewhere in the middle of nowhere, I stopped for gas at least every 100 km.  Turns out I was lucky.  Since I was traveling between two small towns, I chose to take back-roads (the provincial highways) rather than the national freeway and found gas everywhere I stopped.

But here’s what’s been bugging me about this experience.  Nowhere was I asked to pay more than the government mandated price, despite the fact that there was a pretty severe shortage. (You can read more about last year’s strikes at Mail & Guardian).  I’m of course assuming that it is illegal to ask any price other than the government rate.  But is corruption really that rare?  Why wouldn’t gas station owners (or the guys pumping the petrol for that matter) try to extract an additional rent?

Share your thoughts.  Why did petrol prices not respond to this shock?

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