How is the price of gas calculated?

[Chevelle3221]

I notice as of late that ALL the gas staions in my area whether name brand or other seem to have the same price. I have never seen this before. I am curious as to how the price of gas can be the same for one vendor vs the other. I always thought off brands were less than main brands.

 

[KGMtech]

What the market will bear 99% of the time, 1% they go for volume.

 

[Chevelle3221]

Thats not what I asked. Never saw the same price evrywhere before.

 

[BurntMusic]

Thats not what I asked. Never saw the same price evrywhere before.

I've actually experienced the same thing in my area.

There are areas in the country where gas is all priced the same. From personal experience, it seems to be common in Idaho. Shell, Chevron, Sinclair, Maverick, doesn't matter, they're all the same price. Why? I couldn't tell you. This was the same even before covid and the current crisis.

In my area in Texas, there was always some variability. Costco was the cheapest, but then the other stations, Shell, Exxon, Chevron were all within a dime of each other. This week I have noticed the Chevron, Shell, and Exxon all the same price, which has never happened before. I think there's some psychology at play. With gas prices going up extremely quickly, people will go out of their way to make sure they're getting the cheapest price so all the stations are actually trying to compete now, instead of Chevron always being the most expensive.

 

[Chevelle3221]

Find it kinda odd since I have NEVER seen the SAME pricing with ALL brands before. Just trying to understand what is going on. Makes no sense to pay for off brand when main brand is the same pri.ce

 

[dbias]

I've seen alot of stations have the same price in my area when the prices rise and then they come back down at different rates.

 

[JeffKeryk]

The price of gasoline is made up of four factors: taxes, distribution and marketing, the cost of refining, and crude oil prices. Of these four factors, the price of crude oil accounts for nearly 70% of the price you pay at the pump, so when they fluctuate (as they often do), we see the effects. Crude oil prices change depending on the supply available in the market, and the demand for that supply.

There is profit in each cost component, except taxes of course. Crude is sold on the global futures market; the gas we buy now was purchased months ago. When you see people blaming so-and-so, be wary. Crude is back down to under $100 a barrel, but does fluctuate. But do not expect pump prices to come down; the oil company profits are off the charts. Oil companies are not your friend; they will gouge you at every opportunity.

Crude pricing is not straightforward; the prices are manipulated. If the members of OPEC (biggest crude supplier by far) want global oil prices to go up, they can lower the supply by selling less to the market. If they want the price of oil to fall (lowering profits for their competitors), they can flood the market with oil. Other manufacturers in Canada, Russia, and America can do the same thing, but they have a much smaller effect. Whoever controls the most oil has the strongest ability to manipulate its price.

According to Economics, gasoline is price inelastic. That means consumption is independent of price, to a high degree. We have to have it.

 

[kschachn]

There are areas in the country where gas is all priced the same. From personal experience, it seems to be common in Idaho. Shell, Chevron, Sinclair, Maverick, doesn't matter, they're all the same price. Why? I couldn't tell you. This was the same even before covid and the current crisis.

In my area in Texas, there was always some variability. Costco was the cheapest, but then the other stations, Shell, Exxon, Chevron were all within a dime of each other. This week I have noticed the Chevron, Shell, and Exxon all the same price, which has never happened before. I think there's some psychology at play. With gas prices going up extremely quickly, people will go out of their way to make sure they're getting the cheapest price so all the stations are actually trying to compete now, instead of Chevron always being the most expensive.

Such as here in Wisconsin where there is this anachronism called a minimum markup law. A station can be fined for selling gasoline too cheaply.

 

[JeffKeryk]

Such as here in Wisconsin where there is this anachronism called a minimum markup law. A station can be fined for selling gasoline too cheaply.

Blaming gas stations for the price of a gallon of gas is tantamount to shooting the messenger.

 

[kschachn]

Blaming gas stations for the price of a gallon of gas is tantamount to shooting the messenger.

An attempt to repeal the law was made several times, one time was when gasoline last went over $4. No such attempt currently so it remains in place.

It applies to other commodities such as food and beer as well. Lots of interests keep the scheme around.

 

[Chevelle3221]

Never has ALL gas stations in my area be the same price! Hence my question as to why this is the new norm. Seems a bit odd!!

 

[eljefino]

The wholesale price came down but nobody wants to flinch and be the first to drop their retail price.

These past two weeks has been wild-- the Turnpike has often had the cheapest fuel. This says to me everyone else is padding their profits.

 

[Dinoburner]

A few decades ago there were laws passed to prevent collusion meaning price rigging. Can`t say that is what's happening now but it sure is suspicious.

 

[MrQuackers]

Sus

 

[doitmyself]

Maybe an inquiry to the state attorney general office might explain the OP's peculiar observation. I have never seen all brands with the same price.

 

[earlyre]

Blaming gas stations for the price of a gallon of gas is tantamount to shooting the messenger.

no gas station makes money on gas.
the money is made on the crap in the store.
there have been times in MY Memory ( working off and on at my big box's C-store for the last 20 yrs) where we were selling Gas at just break even pricing, and some times at a loss.
your Fountain Drink and Icee are about 90+% profit.

 

[CarLuver]

So how does the costco's i go to have gas 20-40 cents cheaper than anywhere within a 5 mile radius?

 

[Rmay635703]

Such as here in Wisconsin where there is this anachronism called a minimum markup law. A station can be fined for selling gasoline too cheaply.

Even in the cases it isn’t, minimum markup drove all the single owner stations out

Always found it odd when gas was skyrocketing you could save up to a buck a gallon by driving 25 miles away.

 

[JeffKeryk]

So how does the costco's i go to have gas 20-40 cents cheaper than anywhere within a 5 mile radius?

Loss leader? Not sure if this is true, but I'm sure they have strong buying leverage.
It is generally 50 cents cheaper around here.

 

[CarLuver]

Loss leader? Not sure if this is true, but I'm sure they have strong buying leverage.
It is generally 50 cents cheaper around here.

seeing the amount of gas they sell at my costco , if they are losing money on gas they are losing a lot. if i was a brand station near by i would complain like heck to the main office.