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Water & Gas: An American pricing paradox

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During the summer, convenience-store owners in southern Maine live by one rule: Liquids reign.

To understand why, look no farther than the corner of Maine Street and Spring Water Road, where dust-covered SUVs and minivans roll into the parking lot of the Village Kitchen. Here, fathers pump gasoline outside while mothers and children duck into the store and emerge minutes later with arms full of bottled beverages, often water.

Water is particularly popular in this town, since it's home to Poland Spring, the best-selling bottled spring water in the United States.

But customers who take a close look at their receipts may note a curious fact: The water costs more than the gasoline.

At the Village Kitchen, just a few miles from the water's source, a gallon of Poland Spring sells for $1.61 including taxes; one gallon of regular unleaded gasoline costs $1.39, with taxes.

Nationwide, the numbers vary depending on sales taxes, the type of retail outlet involved, and the brand purchased.

On average, however, the pricing relationship is the same. In this regard, it makes the US a global paradox. Most nations pay far more for gasoline than bottled water, even though it is often their only source of drinking water.

How can a nonrenewable product that must be refined from its crude form, and often shipped on ocean tankers for more than two weeks, cost less than a renewable resource that comes in similar form out of the kitchen faucet?

The answer, experts say, is tied to the evolving behavior of American consumers.

"People have gotten into the habit of rationalizing small indulgences more than ever," says George Belch, marketing professor at San Diego State University.

A 'bottled culture'

The price of bottled water varies depending on the brand and outlet, but a liter (a bit more than a quart, and a more common purchase than a one-gallon jug) is often priced at well over a dollar.


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