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

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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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Anonymous 0 Comments

Speculation also factors a lot into it.

If people think the price of gas is going to shoot up (say because one idiot president cancels a pipeline out of spite, or a Russian dictator invades another country out of the blue), then speculators will buy a lot of oil futures. The prices of these commodity futures also dictates the overall price at the pump, regardless of what the current actual supply is. It’s also influenced by what people THINK the price WILL be

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