why are some gas stations ‘ prices cheaper than others?
In: Economics
Market forces, timing, amount of business in the convenience store.
When gas is getting more expensive, what’s in their tank now was bought when the price was lower so they can keep their price lower until the next fill. Inverse when it’s dropping. So that’s timing.
Most gas stations make the majority of their profit in the convenience store and sell the gas basically at cost. If there are multiple stations in the immediate area, they have to push those fuel prices as low as possible to keep people coming into their store rather than going to the one on the other side of the intersection, to the point that new stations belonging to large chains may even use that capital to survive selling their fuel at a loss for awhile in order to push out neighboring stations and make price setting easier in years to come. However, if there aren’t any others around, they can afford to jack it up and make a little money on it. So there’s your market forces example.
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