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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For gas stations selling a similar product in a similar area the gas prices can be just a draw based on the economics of whatever else they expect you might buy once they get you in the door.
If my gas is $.10/gal cheaper than my competitors I might lose out on $1000 for every 10,000 gallons of gas I sell, but I’m expecting that a certain percentage of the people who stop for my cheaper gas are going to buy soda, coffee, beer, candy, sandwiches, lottery tickets, pizza, etc.
I’m not sure of the overall profit margins that gas stations make per gallon of gas but I know that where I live they have become less about selling gas over the last 10-20 years and more about selling everything else.
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