I don't understand gas prices....

[Mskanga]

In my area all of the gas stations are between $1.89 and $1.93 a gallon. Ten minutes away from here is $1.74 , How the heck does this go?

 

[notyetretired]

It could be any of several things, all basically tied to the old economic laws of supply and demand.

For example, if you live near a freeway or busy intersection, or across the street from a mall or big tourist attraction, expect to pay more than an area some 10 or more miles distant.

In addition, there are several areas with differing restrictions on fuel mixtures. Many large cities require gasoline that meets higher standards on emissions, which is generally more expensive and not made in as great quantities, so it's generally priced higher.

Then there may be tax differences. Cross an invisible state, county, or even municipal boundary and suddenly prices can vary quite a bit just because of taxes.

Finally, I've noticed that BP tends to run about 3-5 cents higher than its competitors just about anywhere, so that may be another contributing factor.

 

[brerrabbit]

The previous poster pretty well covered the bases for price differentials but there are a couple more.

Hyper marts (Wal Mart, COSTCO, and some Grocery Chains) use fuel prices as a loss leader. In other words they are willing to sell gas below wholesale to get you into their store. Some like Wal Mart will give you 3 cents per gallon discount if you use their prepaid purchase card.(that puts you in the store). Others like the grocery stores will give you a 3 cent discount if you have their courtesy card. (to get one you have to go inside, then they advertise discounts in groceries if you have the card.) In some markets these retailers are willing to sell below the price they pay for gas just to have you come to their location. This is only applicable in states that do not have laws prohibitong selling below wholesale price. Other times prices are driven by who actually sets the price. Some stations are controlled directly by the corporation whose sign you see, Exxon, Mobil, Shell etc. Some stations are owned by independent operators who only buy their gas from the majors then add whatever margin they want to make.

What winds up happening is as you drive you see a pretty wild spread between prices.

I work in the Retail Fuel industry so I always notice prices everywhere I go.

 

[disneysteve]

I started a thread on this very topic a while back. It does not make any sense.

notyetretired - While you make some good points, none of them explain the situations I see regularly in my neighborhood. For example, there is one station that consistently charges 20 cents per gallon more than the station directly across the street. Now I can understand a difference of 3 or 4 cents. Every business owner has different expenses and overhead costs, but this is ridiculous. What is even more bizarre is that the pricey station gets just as many customers as the cheap station. What the heck are those people thinking??

On my way to work, I pass two stations that are literally right next to each other. Sometimes, their prices are as much as 8-10 cents apart but both still have a steady stream of cars.

Makes no sense to me at all. If I need to fill up, I go to the station with the best price in my area. If I'm in another neighborhood, out of town, etc., I pick the cheapest station I see in the immedicate vicinity. If there are 2 or more stations at an intersection, I'll pick the cheapest one. Why would anyone pick the pricer one?

 

[brerrabbit]

disneysteve,

I agree it would be very strange to see two stations that close with prices that far apart. However I will tell you that New Jersey does pay more for gas than most areas. The major reason is that for whatever reason New Jersey requires station attendents to pump your gas for you. As far as I am aware its the only state that does. That considerably raises the overhead costs of operating a staion there.

 

[Mskanga]

Originally posted by notyetretired
It could be any of several things, all basically tied to the old economic laws of supply and demand.

For example, if you live near a freeway or busy intersection, or across the street from a mall or big tourist attraction, expect to pay more than an area some 10 or more miles distant.

In addition, there are several areas with differing restrictions on fuel mixtures. Many large cities require gasoline that meets higher standards on emissions, which is generally more expensive and not made in as great quantities, so it's generally priced higher.

Then there may be tax differences. Cross an invisible state, county, or even municipal boundary and suddenly prices can vary quite a bit just because of taxes.

Finally, I've noticed that BP tends to run about 3-5 cents higher than its competitors just about anywhere, so that may be another contributing factor.

This is not the case here because the area ten minutes away are a lot closer to the highway and is a more touristy area.
It just doesn't make sense in this area.
And actually gas used to be cheaper in NJ than here , I know because dh works there, for a while gas was just as expensive in both states, now again it's cheaper in NJ than here, so I guess that leaves me to think that someone is really price gauging here....

 

[RadioNate]

Originally posted by brerrabbit
disneysteve,
However I will tell you that New Jersey does pay more for gas than most areas. The major reason is that for whatever reason New Jersey requires station attendents to pump your gas for you. As far as I am aware its the only state that does.

Oregon requires station attendents too. One of the many reasons I'm glad we no longer live in Oregon.

I've always found gas taxes to be the biggest cause of price descrepency.

 

[disneysteve]

Originally posted by brerrabbit
I will tell you that New Jersey does pay more for gas than most areas.

Actually, I don't think that's true.

http://money.cnn.com/pf/features/lists/gasprices/

According to this, NJ has the 4th cheapest gas prices in the nation. And that is despite the fact that the attendants pump the gas (which I despise by the way. That's one thing I absolutely hate about living in NJ).

NOTE: That chart is prices from May 2004.

 

[SC Minnie]

We live 2 exits from the NC line-- small town little competition with an interstate going through it. NC has higher gas taxes than SC therefore their gas is usually more expensive-- not at my exit- it is the same as in NC. 3 exits south (about 6 miles) gas is about 5-8 cents cheaper- still in SC-- it is a larger city and more competition (a few of the low cost stations are at this exit also). Still it goes back to what the other posters have said-- a lot of it is supply and demand. The price will be what the market is willing to bear and comsumers are willing to pay.

 

[Cindy B]

Originally posted by brerrabbit
disneysteve,

I agree it would be very strange to see two stations that close with prices that far apart. However I will tell you that New Jersey does pay more for gas than most areas. The major reason is that for whatever reason New Jersey requires station attendents to pump your gas for you. As far as I am aware its the only state that does. That considerably raises the overhead costs of operating a staion there.

I live in NJ, and see a consistently lower price (almost 1o cents per gallon, if not more) from the Philadelphia, and surrounding suburbs.

We went into PA the other day, and gas was around 12 cents more a gallon. We wound up going further out of the Philly area, and it was higher. It was about $1.89 a gallon in Allentown., PA, and about $1.87 in Philly area.

Here its $1.67 at the cheap station. Most stations are about !.69-1.71 per gallon.

It used to be much cheaper to get gas if you worked/lived in Philly, to go over the bridge to NJ. It was a signifact savings, at least a 25 cent difference. Now its a smaller difference.

I'm still glad I have someone to pump it for me though.

 

[brerrabbit]

I guess its all realative in a way. The price survey shows the average price in Texas at a $1.80 and yet I filled up at a Shell station this morning for $1.659. I always get messed up on prices because everything I see in my business are prices before taxes. In my world NJ has higher prices but after taxes the street price comes up as the third lowest in the nation.

 

[sweet angel]

I'm in NJ. I got gas this morning for $1.67/gallon (regular).

A couple miles down the road and closer to the shore, it was $1.71.

 

[disneysteve]

Originally posted by brerrabbit
The price survey shows the average price in Texas at a $1.80 and yet I filled up at a Shell station this morning for $1.659.

FYI - That price survey is from May 12, 2004. Those are not current numbers.

 

[brerrabbit]

Like I said its all realative the average price surveys are always high. I always seem to buy at a price lower than whatever survey I look at.

State Regular Mid Premium Diesel
Alaska $2.093 $2.215 $2.341 $1.989
Alabama $1.760 $1.881 $1.937 $1.819
Arkansas $1.754 $1.850 $1.968 $1.840
Arizona $1.932 $2.015 $2.131 $2.020
California $2.105 $2.241 $2.277 $2.232
Colorado $1.867 $1.997 $2.087 $1.912
Connecticut $1.953 $2.120 $2.175 $1.988
District of Columbia $1.933 $2.059 $2.120 $1.956
Delaware $1.849 $1.964 $2.051 $1.904
Florida $1.861 $2.016 $2.053 $1.933
Georgia $1.723 $1.852 $1.935 $1.783
Hawaii $2.344 $2.479 $2.525 $2.459
Iowa $1.751 $1.844 $1.932 $1.866
Idaho $1.967 $2.076 $2.134 $2.057
Illinois $1.854 $1.994 $2.056 $1.961
Indiana $1.800 $1.937 $1.991 $1.851
Kansas $1.800 $1.848 $1.920 $1.900
Kentucky $1.764 $1.891 $1.977 $1.800
Louisiana $1.774 $1.891 $1.979 $1.821
Massachusetts $1.886 $2.028 $2.105 $1.924
Maryland $1.841 $1.958 $2.007 $1.908
Maine $1.896 $2.046 $2.103 $1.940
Michigan $1.845 $1.954 $2.032 $1.889
Minnesota $1.779 $1.850 $1.898 $1.877
Missouri $1.729 $1.799 $1.904 $1.784
Mississippi $1.757 $1.853 $1.936 $1.787
Montana $1.992 $2.077 $2.178 $2.017
North Carolina $1.788 $1.897 $1.980 $1.837
North Dakota $1.880 $1.945 $2.015 $1.894
Nebraska $1.838 $1.879 $1.932 $1.889
New Hampshire $1.857 $2.011 $2.083 $1.898
New Jersey $1.809 $1.939 $2.013 $1.819
New Mexico $1.887 $2.010 $2.097 $1.927
Nevada $2.066 $2.177 $2.257 $2.068
New York $2.009 $2.149 $2.195 $2.006
Ohio $1.800 $1.920 $1.997 $1.896
Oklahoma $1.698 $1.756 $1.854 $1.767
Oregon $2.026 $2.138 $2.170 $2.085
Pennsylvania $1.849 $1.949 $2.035 $1.952
Rhode Island $1.920 $2.043 $2.110 $1.948
South Carolina $1.725 $1.834 $1.923 $1.777
South Dakota $1.877 $1.997 $2.079 $1.905
Tennessee $1.755 $1.858 $1.947 $1.800
Texas $1.750 $1.851 $1.918 $1.812
Utah $1.892 $1.995 $2.082 $1.982
Virginia $1.772 $1.859 $1.930 $1.816
Vermont $1.897 $2.040 $2.129 $1.968
Washington $2.005 $2.077 $2.180 $2.121
Wisconsin $1.906 $1.979 $2.070 $1.947
West Virginia $1.863 $1.947 $2.045 $1.930
Wyoming $1.869 $1.948 $2.075 $1.889

Prices updated: 9/13/2004 3:02:16 AM

AAA's Daily Fuel Gauge Report is updated each business day and is the most comprehensive retail gasoline survey available. Everyday over 60,000 self-serve stations are surveyed.

The more interesting data would be what is the weighted average cost of the fuel sold each day.

 

[DIZNYFAN]

In our city it is the same way some stations are at 86.7cents per litre and others are at 79.2 cents per litre and you get down the road and they are alomost at 90 cents or better it sucks honestly.