What I'd also like to know is why a cluster of gas stations ends up with different prices. If you have a competitor next door advertising gas at, say, $3.95 per gallon, why would you put up a giant sign saying yours cost $4.05?
Even more baffling, as a customer, why would you go to the more expensive pumps? Sure, loyalty discounts might account for a certain number of decisions, but that can't be the only answer. I've often wanted to go up to someone pumping gas at a higher price when there's a cheaper station right next door, and just ask them how they decided to pay more.
Back when prices spiked in 2008, I asked a gas station owner about that, he said that the contract he signed with the oil company provider essentially gave them the right to set his prices- and they processed his credit card transactions so they could enforce the deal. If he charged more than they wanted him to, his next set of tankers were priced even higher than everyone else's. If he charged less, they would keep the price for his next set of tankers the same and make him eat the difference. So he pretty much always charged the prices that they told him to. Their prices were set "by a computer" in ways that he didn't understand at all, but he carried them out, because that's what the contract said.
I never look at the price before I go to the pump. If there are multiple stations available then I probably made the choice based on which was easier to get to (side of the street / which direction I'm going) or which looked like it will have cleaner restrooms if I need to pee. I'm not super wealthy or anything, but none of the vehicles I drive take a ton of gas so a difference of 10¢ per gallon just isn't really worth thinking about.
I fill up once every 4-5 weeks. I'd gladly pay $4 for a cleaner, well lit, easier to access and less busy gas station. I'm balancing all these things in the 5-10 seconds I have when I'm trying to choose between gas stations.
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Cleaner restrooms, better cover from sun/rain at the pumps, more likely to have a bottle of sunscreen that hasn't been on the shelf for three years, more likely to have the kind of chips the kids have been screaming about for the last fifty miles.
If I'm able to see the price for multiple stations at the same time and I'm able to adjust my driving to get to any particular one, I'll go for the cheapest one. Typically I tend to optimize for easiest/safest to get to > amenities > price.
For the gas stations available where I live, I have a general idea of which one is going to be cheapest and just go there. The <$2 I could have saved by going out of my way to go for the _currently_ cheapest is not worth the effort to me, especially given how crazy people drive here (Florida).
I regularly go to a gas station that I know has better windshield washing fluid and squeegees, even though it's a bit more expensive than the other nearby option.
Besides the obvious issues of branding and gas quality (some brands overtly cut gasoline with ethanol), some states have rules limiting how frequently stations can change prices. If you can only change price once a week and the competitor can only change once a week, the prices can deviate on underlying volatility even if both stations use the same supplier etc
I think this is actually mandated most everywhere in the USA. Not that I like it. Just saying, that I wish I could choose a station that didn't do that.
In NY, 99% of gas stations sell gas with ethanol in the standard amount, but there are a few which (claim to) sell non-ethanol gas, so it must not be a legal requirement. However, I haven't tested it, so I'm not sure. I did monitor my gas mileage, and some tanks were way higher than others, so I wonder if the "non-ethanol" gas sometimes has ethanol and sometimes doesn't.
Same principle? What do price change rules have to do with mandating including ethanol? I don’t get it.
Edited to add: Perhaps the ethanol requirement was to decrease the use of actual gas in order to keep prices at the pump from rising as quickly as oil prices were? I don’t know the history. I just know that ethanol is terrible for small engines and terrible for mileage.
This baffles me every time in Germany. Price differences for normal gas are around, let's say for the sake of simplicity, 4 cent between different stations. Sometimes it's even lower. But people will drive further or go out of their way so save those 4 cent per litre. If you fill up an 80 litre tank, that's 3,20 Euro at all. Really not worth driving 10 km extra on my way back from work, especially including the time it takes longer and so on.
What I'd also like to know is why a cluster of gas stations ends up with different prices.
Same reason there are different buy/sell positions on the stock market. People have all kinds of different strategies and portfolios and the price at any given time represents a snapshot of these fluctuating values. Not everyone buys gas for the same price at the same time, not everyone is shooting for the same margin, some may use gas as a loss leader to encourage purchase of overpriced goods in the accompanying store, etc.
Little things that make no economic sense like can I pay at the pump, how fast is the credit card processing if I go inside (they’ve gotten slower since chip credit cards are required), does the place have Apple Pay.
For instance my default is always choose a QuikTrip. No matter what part of town I’m in, the place is clean and friendly, they don’t act as if everyone who comes in is a potential robber, and they take Apple Pay.
I have no idea. Usually I remember which one typically has the lower price and stick with that one unless there’s a temporary convenience factor, then I might go to the other one.
More or less, the distributors are all paying about the same when they load the gas onto the truck from the plant. The difference in cost comes from the additive mix. Some gas brands qualify as "top tier detergent gasoline," which some cars brands will recommend using.
Comments
What I'd also like to know is why a cluster of gas stations ends up with different prices. If you have a competitor next door advertising gas at, say, $3.95 per gallon, why would you put up a giant sign saying yours cost $4.05?
Even more baffling, as a customer, why would you go to the more expensive pumps? Sure, loyalty discounts might account for a certain number of decisions, but that can't be the only answer. I've often wanted to go up to someone pumping gas at a higher price when there's a cheaper station right next door, and just ask them how they decided to pay more.
Back when prices spiked in 2008, I asked a gas station owner about that, he said that the contract he signed with the oil company provider essentially gave them the right to set his prices- and they processed his credit card transactions so they could enforce the deal. If he charged more than they wanted him to, his next set of tankers were priced even higher than everyone else's. If he charged less, they would keep the price for his next set of tankers the same and make him eat the difference. So he pretty much always charged the prices that they told him to. Their prices were set "by a computer" in ways that he didn't understand at all, but he carried them out, because that's what the contract said.
I never look at the price before I go to the pump. If there are multiple stations available then I probably made the choice based on which was easier to get to (side of the street / which direction I'm going) or which looked like it will have cleaner restrooms if I need to pee. I'm not super wealthy or anything, but none of the vehicles I drive take a ton of gas so a difference of 10¢ per gallon just isn't really worth thinking about.
I've seen differences up to $0.30. Pay me $4 to make a left turn? Sign me up.
Driving in Florida, I'll gladly pay $4 to _skip_ a left turn... :)
I fill up once every 4-5 weeks. I'd gladly pay $4 for a cleaner, well lit, easier to access and less busy gas station. I'm balancing all these things in the 5-10 seconds I have when I'm trying to choose between gas stations.
Gas is priced using software, just like hotel rooms or airline tickets. Here's a white paper download, it may explain the factors:
https://www.kalibrate.com/achieve-fuel-pricing-mastery-lp
Right turn vs left turn.
Brand loyalty; that one time your uncle went to the other place and then two days later needed an engine rebuild, lalala.
Cleaner restrooms, better cover from sun/rain at the pumps, more likely to have a bottle of sunscreen that hasn't been on the shelf for three years, more likely to have the kind of chips the kids have been screaming about for the last fifty miles.
If I'm able to see the price for multiple stations at the same time and I'm able to adjust my driving to get to any particular one, I'll go for the cheapest one. Typically I tend to optimize for easiest/safest to get to > amenities > price.
For the gas stations available where I live, I have a general idea of which one is going to be cheapest and just go there. The <$2 I could have saved by going out of my way to go for the _currently_ cheapest is not worth the effort to me, especially given how crazy people drive here (Florida).
I regularly go to a gas station that I know has better windshield washing fluid and squeegees, even though it's a bit more expensive than the other nearby option.
Besides the obvious issues of branding and gas quality (some brands overtly cut gasoline with ethanol), some states have rules limiting how frequently stations can change prices. If you can only change price once a week and the competitor can only change once a week, the prices can deviate on underlying volatility even if both stations use the same supplier etc
I think this is actually mandated most everywhere in the USA. Not that I like it. Just saying, that I wish I could choose a station that didn't do that.
In NY, 99% of gas stations sell gas with ethanol in the standard amount, but there are a few which (claim to) sell non-ethanol gas, so it must not be a legal requirement. However, I haven't tested it, so I'm not sure. I did monitor my gas mileage, and some tanks were way higher than others, so I wonder if the "non-ethanol" gas sometimes has ethanol and sometimes doesn't.
My understanding is the rule is one price change per day. A regulation from the 70's (guess?) to stave off price gouging. Same principle applies.
Same principle? What do price change rules have to do with mandating including ethanol? I don’t get it.
Edited to add: Perhaps the ethanol requirement was to decrease the use of actual gas in order to keep prices at the pump from rising as quickly as oil prices were? I don’t know the history. I just know that ethanol is terrible for small engines and terrible for mileage.
Whoops replied to the wrong comment. Was meant to be in reply to "how frequently stations can change prices"
As someone who has gotten a tank of sand & water before, I tend to prefer the less sketchy station, even if it costs more.
It's a couple cents difference most of the time in my experience, not worth driving in a different direction or such for that.
This baffles me every time in Germany. Price differences for normal gas are around, let's say for the sake of simplicity, 4 cent between different stations. Sometimes it's even lower. But people will drive further or go out of their way so save those 4 cent per litre. If you fill up an 80 litre tank, that's 3,20 Euro at all. Really not worth driving 10 km extra on my way back from work, especially including the time it takes longer and so on.
Same reason there are different buy/sell positions on the stock market. People have all kinds of different strategies and portfolios and the price at any given time represents a snapshot of these fluctuating values. Not everyone buys gas for the same price at the same time, not everyone is shooting for the same margin, some may use gas as a loss leader to encourage purchase of overpriced goods in the accompanying store, etc.
Little things that make no economic sense like can I pay at the pump, how fast is the credit card processing if I go inside (they’ve gotten slower since chip credit cards are required), does the place have Apple Pay.
For instance my default is always choose a QuikTrip. No matter what part of town I’m in, the place is clean and friendly, they don’t act as if everyone who comes in is a potential robber, and they take Apple Pay.
I have no idea. Usually I remember which one typically has the lower price and stick with that one unless there’s a temporary convenience factor, then I might go to the other one.
Honestly I would probably go to the one with the cooler sign that's my favourite colour and not look at the prices.
More or less, the distributors are all paying about the same when they load the gas onto the truck from the plant. The difference in cost comes from the additive mix. Some gas brands qualify as "top tier detergent gasoline," which some cars brands will recommend using.