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Why do gas prices vary between different cities?

V. Arnold Asked:
Why are gas prices consistently 15-20 cents higher in Pickerington than in other areas of town?

John Asked:
Why, last week, was there a 73 cent difference in gas prices between Marysville and Delaware? The difference in mileage is only about 15 miles!

Doug Asked:
I was wondering how two gas stations for the same company can differ in price by $0.26 when the two stations are around the corner from each other?

Richard Asked:
Why are gas prices in Waverly, OH consistently 10 to 30 cents higher than Chillicothe, just 16 miles away, or other communities north of Waverly?

Julie Asked:
Is there any reason why gas prices in all the stations in Pickerington have been 20 cents higher than the rest of Columbus for the last month and a half? I paid $2.38 at the Kroger in Pickerington yesterday but my husband paid $2.09 on Morse Road. Why is there such a huge difference?

Mark Asked:
How is it that gas prices can jump 36 cents in one day and decline a penny or nickel at a time, especially at Speedway stations?

J Dana Asked:
What caused gas prices to jump thirty cents a gallon over the past twelve hours, up and down Morse Road on the east side of town?

We Found:
We spoke with Jason Toews, from GasBuddy.com, he says there are a number of reasons why gas prices vary.

1) Zone pricing:

This means that the gas stations pay different wholesale prices for gasoline, depending on what zone they are in. One metro area may have dozens of zones, with prices varying up to 40-50 cents per gallon (depending on the metro).

2)Competition between the stations

. Gas stations pay very close attention to what their competition is charging. If one station lowers their price, the competition down the street is forced to lower their price, or settle with fewer people coming to their station. There is a delicate balance between making less off of each gallon but with more customers and fewer customers paying a higher price.

3) Some stations have a much more aggressive pricing strategy than others

. They try to sell gas “very cheaply” with the goal of increasing in stores sales- where they often have a higher profit margin.

4) The number and mix of stations in the area.

Some areas have a lot of stations vying for your business. They have to lower prices to beat their competitors. Neighborhoods with a wholesale club like Costco, Sam’s Club, or even Murphy USA, tend to drive down prices locally. They often use gas as a loss leader, or sell it close to cost. This forces other nearby stations to compete.

5) Affluent neighborhoods have people that are generally less price sensitive

. There also tends to be fewer gas stations in these areas because of the cost of doing business. Therefore, these areas tend to have higher gas prices.

There are a multitude of other minor factors that play into this as well.

For more information, visit ColumbusGasPrices.com or GasBuddy.com

Posted by on 10/09 at 04:45 PM
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