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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Supply & demand absolutely apply, but you need to think about more of the factors that go into “demand”. It’s not just “how much gas do I need?”.
It’s a messy combination of: do I care about brand and, if so, which one; do I need a particular grade or type; how far out of my way am I willing to go; do I know/care to check if another station has it cheaper; do I want anything else while I’m at the gas station; do I want to make a left or right turn; and so on.
“Demand” is really complicated and varies wildly by person, place, time of day, mood, and lots of other things. As a result, there’s no “one demand” and hence no “one right price”…all the gas stations are all trying to find their one optimum, which will vary with their business model and lots of other things, among a wildly changing sea of demands, and won’t be the same as an a slightly different gas station on the other side of the street.
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