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 supply and demand. It depends on what deal that the owner can strike with the jobbers that distribute the gas to the stations. If an owner of a store has 20 stores and pushes higher volume, they get cheaper fuel. If a store sells only a few gallons at a higher rate, the supplier won’t cut any breaks. The difference is, that you can tie up 30k a month on fuel stock and make the same money charging higher prices and moving less fuel, while the guy down the street can tie up 130k a month moving massive amounts of fuel, and not make much more because he’s charging less anyways.
The guy tying up 130k a week in fuel supply is making more money on inside sales, though. Fuel isn’t generally sold to make money…it’s sold so that you might come buy 13 cent marked up drinks and snacks.
Gas stations are a terrible investment as far as what you must pay in order to make penny profits. You are surviving on sheer volume. They’re a great investment if you can afford to tie up a lot of money permanently.
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