Why do supply and demand not seem to apply with gas stations, with such varying prices and “that really cheap place!” phenomena?

Question

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?

In: 38

Answer 1

I’m failing to see how supply and demand come into play for $4.09 gas and $4.19 gas.

Gas stations are also convience stores. They can sell gas at-cost and make money on people picking up cigarettes while waiting in line. Or they can make an extra 10 cents on the fuel margins.

Its more of a retail strategy question as anything.