There’s a Citgo gas station near me that always charges 15-20% more than the average rate in the neighborhood. Yesterday it was $2.48/gal for regular, self serve. The Shell across the street that’s just as easy to get to was only 2.11. The current range around here is 2.08 - 2.13. And it’s always that way - a good 30-50 cents more than the local average.
Any idea why a station would charge so much more for gas? They have a few service bays as well, so I assume that’s where they make their money. But what would be the point in even keeping the pumps around (since I assume their maintenance and inspections cost money) if you price your gas so high? I’ll deal with a few cents more per gallon for convenience sake, but 37 cents/gallon to avoid making an easy left turn?
I put this in GQ since I hope there’s a real answer to this.
I hope someone has an answer to this, too. In the city I work in there are two gas stations separated only by a narrow side road. One of the stations is always 9-15 cents more expensive than the one next to it - at least in the five years I’ve worked in the city, anyway. It’s not as though the more expensive one is full service and the other isn’t, since they both only offer self-serve.
The only correlation I’ve seen is that some gas brands are consistently 10 cents or more than others, and stations that carry that brand are stuck charging the higher price. Stations that shop on the spot market can sometimes (often) do better than the majors. I suspect the majors charge higher franchise fees - one Exxon station owner near us protested mightily the prices he had to charge. Exxon got kicked out of the Bay Area, so its not longer a problem.
My big question, which might not be a GQ one, is why do people pay ten cents more a gallon in these cases? In the old days, gas credit cards, or better service, might have explained some of it. Today, I just don’t get it.
Ditto. There were two gas stations for the longest time across the street from each other in one of the Chicago suburbs, and one station always charged 40, yes 40, cents more per gallon than the station across the street. It made absolutely no sense. All the gas stations in the area, both big and small, charged at about 40 cents less per gallon. Not surprisingly, there never was anyone at the gas station. It has since become a new station and now the prices are pegged to the pump across the street.
Some people are willing to pay more for “name brand” gas.
It might have something to do with differing ethanol concentrations in the gas. Probably 15 years ago, a gas station near my house called “The Workingman’s Friend” offered full-service gas at a price lower than nearby self-service rivals. Their gas had a higher ethanol concentration than the nearby stations. From my limited understanding, higher ethanol content means lower total gas mileage.
Years ago, in a galaxy far, far away (read that while in college) I worked for Citgo as one of those desk jockeys who took your money after you self-served yourself. We had the cheapest gas around, yet people still filled up across the street, pay ten cents a gallon more from the Standard Oil station.
Spiral Stairs has it spot on. However, in our case at the time, all gasoline came from the same regional tank farm, regardless of brand. Talking with the tanker drivers who delivered “our” gas and I was told they all filled up at one location at the tank farm and then delivered their supply to the various stations. In other words, all the gasoline came from the same spigot at the tank farm and was delivered to the various brand stations, even though the gas was identical for every station.
Of course, times may be different today as some brands use their own additives and probably use a different spigot at that tank farm. Whether brand additives affect vehicle efficiency and emissions is subject to debate.
Then again (and you knew this was coming), … YMMV.
If its a corporate-owned station, the price is typically set by the company based on price surveys. The surveys usually involve more than the immediately visible stations. For example, when I worked at a gas station, the manager had to do a survey of the prices of stations within three miles of our location.
Some stations have other draws (the Mobil thingy, clean indoor restrooms, carwash, etc.) that may actually draw customers away from stations that offer cheaper gas.
Convenience can be a factor. The station that is right off of the exit can probably charge more than the one across the divided highway.
Branding. Some people are reluctant to buy gas from an off-brand station. And some consumers are probably convinced that some brands are better than others because of advertising about additives.
IANA expert on any related field, but since nobody has mentioned it, here goes:
I understad that the corner where the station is makes it more convenient to drivers and that makes them able to charge more or less for gas. I forget how that went, and I hope someone will come to correct me or support me but, in short, people don’t like to cross the street for fuel. Depending on how the intersection is approached, and the traffic patterns, some corners are more likeable than others and a station on that corner can afford to charge 10 cents over and not lose customers.
fire away.
Added: after posting, I see that point 3 of post 7 touches on this.
Thanks for the replies. I still don’t think any of the reasons posted explain this gas station though.
Survey area - I passed no fewer than 10 gas stations on my way to work today, ranging from 0.5 to 5 miles from the station in question. None were more than $2.13/gal - 35 cents less than the Citgo. So if Citgo corporate is setting their prices, they’re doing a really bad job of it.
Branding - The station across the street at $2.11 is a Shell, which is at least as well known as Citgo. I also passed an Exxon and a Sunoco today which were within the 2.08 - 2.13 range.
Convenience - The Citgo is in no way more convenient to get to than the Shell across the street. It’s a 2 lane undivided street. If you’re heading east, the Shell is on the right and the Citgo is on the left, and obviously reversed if you’re heading west. I’ve driven past it at both morning and evening rush hour, and making a left turn into the station of your choice would never be more than a 10-20 second wait - usually no wait at all.
Predatory pricing - No.
Convenience store - Doesn’t have one. Does do service, but that’s not an impulse buy.
No long-term contract - now that’s an interesting one. Wouldn’t that mean it would occasionally spike high, as opposed to being permanently high? The Citgo is always way more than the Shell across the street (which stays within the area average). I’ve never seen it within 25 cents of the Shell.
This is interesting. When I lived in Indianapolis, there was a very similar, if not identical, situation near where I lived.
I think you might be underestimating the laziness – and overestimating the frugality – of the average person. I always went to the cheaper gas station, no matter which way I was going, but once or twice when there were people with me, I was mocked for doing so. “You’re going out of your way to save a few cents? Bwaaahaaahaaa! Some people are so cheap!” I totally don’t get it, but those people are out there.
I don’t completely understand how they can survive at inflated prices, but they seem to.
I agree with this. I drive all over the bay area, and the relative pricing of brands is pretty much the same no matter where they are, which wouldn’t be true if convenience were a factor. Prices are higher in certain locations, but the convenience premium is about the same for all brands.
When there was a shortage here, from a refinery shutting down, some of the independent stations briefly had higher prices than the majors. For the vast majority of the time, though, the indies are cheaper, no matter if the price is rising or falling. If long term contracts were a factor, the major brands should be cheaper to gain market share in a time of rising prices, unless, of course, they are increasing profit. Likewise, the gap should increase in a time of falling prices.
I tend to think the answer is just marketing policy. They set the price point at a certain level, and accept that this is higher than the indies. My father did have brand loyalty, but does anyone really have it today? They must, or the oil companies could never get away with this.
Just depends on the situation. If I’m by my house, I will just about always search out the cheapest fuel. However, if I’m needing to buy gas (or diesel, depending on which car I’m driving) and I’m not near home, and particularly if I’m not in a familiar area, I generally wouldn’t bother making two inconvenient U-turns to save what might amount to $2. Of course, in the OP’s example where we’re talking about 30-50 cents higher per gallon, I’d probably still go to the more expensive station, but only put in enough fuel to get me to a cheaper station near home.
I can see where you might find this mentality lazy and/or illogical, but I just wanted to raise my hand as someone who won’t necessarily go out of my way for less expensive fuel.
And then there are those of us who never look at the price of gas. For the size of my tank, it just doesn’t matter if the gas at one place is .10 or .20 more per gallon.
So if I see 2 stations next to each other, one full and I’d have to wait to get gas, and one with pumps available, I’d go to the one with the pumps available.
And to more directly answer the OP: Does anyone know what the markup is on gas? Isn’t it pretty low, like only cents per gallon? If that IS the case, someone setting their price to generate 4 times the profit per gallon could sell only one third the gas and still make more profit. Just an idea.
Exactly. I never quite understood the fascination memorizing gas prices down to the penny. It isn’t a horrible thing of course but the math has never made me see the appeal except for the extreme cases. I wouldn’t know about the extreme cases though because I am completely oblivious to all gas prices, let alone personally surveying a given area. They change day to day and it seems like too much work. I suppose a a station could capitalize on that and get to deal with fewer customers while still making money.
It could be because the main business is from the service, the shop is really not interested in selling gas, and they just keep the pumps as a convenience for the service customers. Can’t say I’ve heard it about service stations specifically, but I’ve heard it about other businesses.
$2.48 is high!?!? Here, that’s lower than the minimum right now. I know of two gas stations that are across the street from each other, and it is a small street. One is 35-40 cents higher, I believe it a Shell station, and the cheaper one is Arco or some other cheap brand. The cheaper station is usually clogged with traffic, and it seems that people go to the more expensive one for convenience, as you don’t have to wait, and can use you gas card, which I don’t think the other company offers.
Yeah, I didn’t word that very well. Laziness comes off sounding kind of harsh, and I didn’t mean it to. I apologize. You explained the position very well – the money you’d save isn’t worth it to you. I can respect that. It definitely is to me, but my time isn’t at a premium. That might change the equation pretty quickly.
And for what it’s worth, I wouldn’t drive to the next town to save money on gas. My sister-in-law does, and I think she’s quite batty. But I would cross the street to do so. We all have our thresholds, eh?
Another data point - I passed another Citgo yesterday, about 5 miles from the high-priced station, and it was $2.17/gal - still higher than any other station, but only by 4 cents. So it’s not corporate setting prices.