If gasoline has such a low profit margin, then why the huge difference in prices?

[Rich Engelhardt]

I constantly see someone or another say that gas stations struggle because of the low profit margin on gas.

Then I see the prices and wonder who are they trying to kid?

The three stations a half mile from me is selling 87 octane for $3.55 a gallon.
Meanwhile, the Get Go station that's 4 miles away is selling 87 octane for $3.19 a gallon when I swipe my "loyalty" (yeah right! ) card and get a $.03 a gallon discount.

That's a $.36 a gallon difference - or - 11%.

Just another lie from the oil industry I guess.

[Art Mann]

The oil industry does not set prices at local stations. Also, 11% is a tiny markup compared to many things you buy without giving it a secon thought.. I would not be surprised to find that tool stores mark up their products 40% or more. Caskets are often marked up 300% or more as your punishment for dying.

[Scott Shepherd]

Depends when they bought the gas. If the $3.55 a gallon people paid $3.25 a gallon and their tanks are full, they probably aren't going to lower the price until the tanks are empty or close to it.

If you ran a store, and paid $3.25 for 30,000 gallons of gas and then the price dropped, would you sell it for less than you bought it for?

Oil companies (owned by you if you have a 401K program) are all publicly traded companies, you can see their margins in their financial statements.

There's a gas station here that's 60 cents higher than anyone else, always. Has been since the day they opened it. Does that one station owner represent the entire oil company? I don't think so.

[Barry Richardson]

Around here, it varies too, maybe not that much though. I am told the main reason is that different municipalities levy different taxes on gas.

[Judson Green]

In my immediate area the price of one station to the next is usually within a nickel or less of one another and usually that difference only lasts a few hours then they're the same.

The outliers are two stations right off the freeway. Those two can be a dime or more per.

[Brian Elfert]

Gas stations will immediately raise prices if oil prices rise, or a refinery closes, or whatever. How come they have no problem raising prices 25 cents in one day, but if wholesale gas/oil prices drop it take days or weeks to make it to retail?

Why is it okay for a gas station to make extra profit because paid say $3.00 a gallon for their gas, were selling it for $3.25, but raised it to $3.50 a gallon, but they can't lose money when they have to sell $3.25 gas for $3.00 because the wholesale price dropped to $2.75? If they can reap extra profits when gas prices go up why can't they lose a little money when prices come down?

[Scott Shepherd]

Why is it okay for a gas station to make extra profit because paid say $3.00 a gallon for their gas, were selling it for $3.25, but raised it to $3.50 a gallon, but they can't lose money when they have to sell $3.25 gas for $3.00 because the wholesale price dropped to $2.75? If they can reap extra profits when gas prices go up why can't they lose a little money when prices come down?

Would you run a business and charge less than you paid for things because you might make more some other time? Or watch the price drop even more so you can lose even more?

No other business does that, why should the gas station do it? I've never understood the fascination with oil companies and what's "fair". It never seems to apply to any other business. Food Lion charges more for Milk than Walmart. I don't see any threads about why Food Lion charges more for milk.

[Brian Elfert]

Would you run a business and charge less than you paid for things because you might make more some other time? Or watch the price drop even more so you can lose even more?

No other business does that, why should the gas station do it? I've never understood the fascination with oil companies and what's "fair". It never seems to apply to any other business. Food Lion charges more for Milk than Walmart. I don't see any threads about why Food Lion charges more for milk.

Businesses choose to lose money on certain products all the time. Why is it okay for gas station owners to make double or triple their normal profit margin when gas prices are spiking, but it isn't okay to them to lose money when prices are falling? How come gas station operators price gas based on the next load when prices are rising, but they base prices on what is in the tank when prices are falling? They shouldn't be able to have it both ways.

[Brian Elfert]

People bitch and moan about oil/gas prices because oil is such a big part of our economy and such a big part of the family budget. No other product consumed by nearly 100% of Americans is so present in our media. News outlets constantly report the price of oil. There are news stories nearly every day about oil and gasoline. One can look on the Internet and see what wholesale gasoline is selling for that day. If John Q. Public sees that the wholesale price of gasoline dropped 5 cents that day and gas stations raise the price by 5 cents that day then they feel ripped off.

No other businesses advertise the retail prices on hundreds of thousands of signs across the country. Grocery stores don't have huge signs showing the price of milk in front of their stores and on billboards. Milk prices can vary by up to 50% between stores. Gas prices rarely vary by more than 1% or 2% between stations in the same area.

[Jason Roehl]

Gas stations will immediately raise prices if oil prices rise, or a refinery closes, or whatever. How come they have no problem raising prices 25 cents in one day, but if wholesale gas/oil prices drop it take days or weeks to make it to retail?

Why is it okay for a gas station to make extra profit because paid say $3.00 a gallon for their gas, were selling it for $3.25, but raised it to $3.50 a gallon, but they can't lose money when they have to sell $3.25 gas for $3.00 because the wholesale price dropped to $2.75? If they can reap extra profits when gas prices go up why can't they lose a little money when prices come down?

It's partly about what they bought the current tank of gas for, but it's also partly about how much the next tank of gas is going to cost--when they're buying 6,000 gallons of gas at a time, and generally only making 2-4 cents per gallon profit margin ($120-240 per delivery), a too-low price can leave them with too little cash reserve for the next tank.

I've noticed that the stations that often have the lowest prices are also the first ones to raise prices when the price of oil goes up.

[Brian Elfert]

I'll relate what happened to me at a small engine repair recently. Very small rural operation. I needed a clutch for my riding mower. He had one that matched exactly. Price on the tag said $89, but the owner said no way can I sell it for $89 as that is less than I can get another one in for. He said the price is $195. I wasn't upset as $195 was less than I could get one online for. In the end, the owner found me a John Deere clutch that would work with an extra shim for only $150. I was perfectly willing to buy the $195 one that fit exactly, but the owner is big on saving customers money. I keep going back even though it is a 25 mile drive for me.

If he had sold me that clutch he would had made a pretty decent profit, and I doubt that he would have ordered another one for stock since it is a slow moving item it appears.

[Scott Shepherd]

Businesses choose to lose money on certain products all the time. Why is it okay for gas station owners to make double or triple their normal profit margin when gas prices are spiking, but it isn't okay to them to lose money when prices are falling? How come gas station operators price gas based on the next load when prices are rising, but they base prices on what is in the tank when prices are falling? They shouldn't be able to have it both ways.

Ummm....because we live in a democracy where you can chose to do what you want and you'll be rewarded or penalized by people coming to your business or abandoning it?

I still don't get the fascination with gas prices. If the gas goes up .03 a gallon, that's . 45 cents more per fill up. My guess is most people fill up once a week, maybe 1.5 times a week. So we'll get fixated on something that costs us 45 cents more a week and scream that we're being ripped off, meanwhile, food prices went up 40% and cost you $50 more week and, again, no one says anything.

Just for the record, stores do publish their prices every day. It's in the local news papers daily as advertising.

[Gordon Harner]

I don't know the suppliers current pricing policies. Many retail brands don't have refineries today or are separate corporations. But, it used to be that the suppliers had zone pricing whereby depending on the zone the same product was wholesaled at different prices. My big gripe is heating oil, not taxed as diesel for diesel vehicles but priced at the same level. Go figure. I know, the supplier has to cover his overhead and make a profit. Around here, heating oil not taxed is higher than diesel at the pump'

[Chuck Wintle]

I constantly see someone or another say that gas stations struggle because of the low profit margine on gas.

Then I see the prices and wonder who are they trying to kid?

The three stations a half mile from me is selling 87 octane for $3.55 a gallon.
Meanwhile, the Get Go station that's 4 miles away is selling 87 octane for $3.19 a gallon when I swipe my "loyalty" (yeah right! ) card and get a $.03 a gallon discount.

That's a $.36 a gallon difference - or - 11%.

Just another lie from the oil industry I guess.

My opinion is that pricing is less influenced by real market factors such as supply and demand and more by the capriciousness of marketing executives making decisions not based on reality. Where I live all gasoline comes from 1 or 2 refineries yet this same gas can differ in price by as much as 15 cents/ liter depending upon where it is sold.

[Jim Koepke]

Around here, heating oil not taxed is higher than diesel at the pump'

If the diesel from the pump was on a truck that came around and pumped into your car, you can bet the price would be higher.

jtk