As gas prices continue to soar to historic levels, savvy consumers are often looking for the best deals to make the most of their hard-earned cash.
However, sometimes you can find the cheapest price just by crossing one or two lanes.
So why do gas prices vary so much from station to station?
Experts say it comes down to several key factors, including taxes, wholesale prices and profit margins.
So let’s start with taxes. California is known for its very high gas tax, but the tax rate varies by county and city.
according to NACS, the Association for Retail of Convenience and Fuel, all gas retailers must charge a federal gas excise tax, which is currently about $0.18. In California, taxes are high at $0.86. Alaska has the lowest state tax on gasoline at about $0.33, according to NACS and the American Petroleum Institute.
A gas station in downtown Los Angeles may be on the corner where another city boundary begins. The city may impose different taxes on gas.
California also has stringent requirements for fuel blends that other states don’t. Gasoline that meets California standards is expensive to produce and that cost is passed on to the consumer.
Taxes and fuel blends therefore play a role in differences from state to state and city to city, but they cannot fully explain why gasoline prices vary in the same city on opposite sides of the same street.
Experts say the main reasons for the disparity come down to margins and competition.
Gasoline retailers have to buy gas from somewhere, and wholesalers have the prices. For gas stations, the brand of gasoline they sell is a big factor in determining prices. Chevron is priced differently than Exxon, which is priced differently than Shell. Customers pay extra because some are more expensive than others and gas stations aren’t making huge profits from each gallon sold. , it’s okay to pay a lot of money for a particular brand.
And the higher volume of gasoline sold means that gas stations will likely get better wholesale prices, making it easier for them to sell gasoline at lower retail prices.
Another thing to consider is is there a convenience store at the gas station? While most gas stations make only a small profit from the sale of gasoline, gas stations with convenience stores make more than half of their total revenue from goods sold inside the store, NCAS said. .
Gas stations with stores tend to charge lower gas prices because they know that they make up for the difference in sales at convenience stores. Low prices lure people to spend their money in stores where the margins are far more favorable for business owners. So if you buy soda and sunflower seeds in bulk, they may help you pay to keep their prices down.
But as with most industries, perhaps the biggest reason for price disparity comes down to competition.
If you have gas stations without convenience stores nearby, we recommend adjusting your prices accordingly. If the gas station is not a name brand business, it has its own set of challenges, such as low wholesale gasoline discounts. Stores that are inconvenient to drive to may need to lower prices to attract customers who normally go to competing stores across the street.
There are many reasons why a gas station sells gas cheaper than its neighbors. Still, it ultimately comes down to a complex equation for business owners who want to maximize profits while testing what consumers will tolerate and prioritize.
https://www.kron4.com/news/why-is-gas-sometimes-cheaper-across-across-the-street/ Why are petrol stations on opposite sides of the same street priced differently?