I have never, ever understood this. Gas is for the most part is a simple commodity. Sure, some prefer a premium brand (like Shell) to a cheaper one (like ARCO), but I can’t for the life of me figure out why there is such a wide variance even within a single mile or two of a city (and amongst the same brand!) I would think that supply and demand would reign supreme here. It’s the same stuff.
You get that one gas station that charges $0.10 less than all the others in the area and the lines are out to the street.
So where are supply and demand?
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It’s not just a case of all the reasons one gas station may want to earn more or less profit at one point or another. They have vast reservoirs of fuel that are filled for them from their supplier at a price the day (and hour, and. minute) it was either ordered or delivered. No one makes huge margins on their fuel sales, so when their price per gallon/litre changes up or down, they’re still sitting on fuel they paid a different price for. The next stop over may have bought it cheaper, and will be selling it cheaper now. But they refilled earlier last week, so were probably more expensive for a little while last week.
Now you might think good, big business would just take the losses and round them out against the extra profits they make another time. But (a) prices don’t just move around a long-term median – sell it all this week for a bit of a loss, and prices may well stay low for the next year, either you spend all that time making a loss, or you need to adjust prices retroactively. Meanwhile, those motorists who like to make little savings will be buying from whoever is taking their losses this week, and the whole industry will be stations making a loss or breaking even, with less and less excess available to bring their average up to a profit.
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