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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Gas stations typically operate on a cost-plus basis, meaning they tack on a set amount per gallon on top of their cost. Might be 35 cents/gallon, might be 50 cents, etc.. Factors that may affect that added mark-up are things like operating costs (rent, employee wages), other revenue streams (minimart, repairs, car wash), customer volume (is rent spread across 100 customers/day or 1000/day), supply/demand of location(are they right off a highway? Are they the only station for miles around?). There may be local taxes, even within close proximity that change suburb to suburb or county to county, maybe even some very local neighborhood taxing district.
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