Thursday, October 11, 2012

Mexican gas is a substitute for San Diego gas

The main idea behind purchasing power parity is that similar goods--in the absence of trade barriers or transportation costs--should have the same price, when expressed in the same currency units.  Trade is the force that links these prices together.  But sometimes, "trade" means that the consumers, rather than the goods, move to the lower priced country.  Gas prices in the San Diego near $5, consumers are driving across the border to fill up with Mexican gas for only $3.30

"I don't buy gas in the U.S. anymore I'll buy it in Mexico," said one Chula Vista resident.
This driver, who identified himself only as “Joe,” has a Hummer, an Expedition, an Excursion and a BMW so he says he has no choice but to find the cheapest gas.

HT:  Matthew

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