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

[Wade Lippman]

There's a gas station here that's .60 cents higher than anyone else, always. Has been since the day they opened it. .

The nearest gas station to me is $0.50 higher than two others a half mile away. I have always wondered how he stays in business; I surely have never bought from him. Of course, he only has to sell a quarter the gas as the other guys to make the same profit; maybe there are enough really stupid people to make it worthwhile?

[Myk Rian]

A Speedway near here started charging $.15 more for each grade step. The only station doing that. I don't go there anymore.

Remember when the price would change only when the stations got a new delivery? I wonder what happened with that.

[Rick Potter]

Around here gas is higher than elsewhere. Usually around $4. Costco is generally the least expensive place to buy, and if you have their American Express card, you get back 3%. That would be about 12 cents off the normally cheapest gas in this area.

Back in the day, when there were numerous independent stations, they could charge what they wanted, and there were gas wars pretty regularly. In this area, most independents are long gone, bought out by the major brands, who are now trying to get out of the retail end. They prefer selling to chains, like 7-11, etc, and not dealing with the end customer.

That's how it was 'splained to me, anyway. 76 gas seems to be only in small chains now, I haven't seen a Texaco station in years (are they still around?). There are still some Chevron stations, but all self serve with convenience stores around me. Not too many service stations locally either. They have either dropped selling gas, or changed the service area to a mini market.

Progress, I guess.

Question of the day....Why do they still sell mid grade gasoline? Most cars take 87, some take premium 91, can't think of any that recommend mid grade 89.

Rick P

[Brian Elfert]

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?

Most of us have little choice on buying gas. It isn't like if gas jumped 25 cents overnight that we would stay home from work rather than filling the tank. I suppose one could buy an electric car, but not often cost effective.

Every 5 cents a gallon costs me almost a buck per fill-up. It really isn't a big deal for five or ten cents a gallon. I do start to notice when gas goes from say $3.25 a gallon to $3.75 a gallon. We can also wish for $2 a gallon gas, but I realize $3 plus per gallons is here to stay. I'm just hoping we don't see the days of gas consistently over $4 any time soon. The price of oil does affect everything we buy as it costs more to make and transport when oil prices go up.

[Greg Peterson]

Several billions in profit is a lot of profit. Nevermind the percentage. That's a whole lot of money. Margins may be low, but everyone needs oil, so margins don't matter as long as they stay on the plus of the ledger.

[Scott Shepherd]

Several billions in profit is a lot of profit. Nevermind the percentage. That's a whole lot of money. Margins may be low, but everyone needs oil, so margins don't matter as long as they stay on the plus of the ledger.

Great Greg, do you have a 401K program? If so, YOU are the one profiting from all these profits of the big bad greedy oil companies. The truth, look it up, is that huge percentages, like 30% of the oil stocks are owned by pension funds. You know, those things where workers get quarterly statements that tell them they made or lost money?

Oil executives own about 3% of the stock. The rest is owned by IRA's, Pension Funds, and normal people like you and me that own stock. So when you're prepared to watch your pension and IRA's go down instead of up, then we'll all be good. You can't have it both ways. You can't want your retirement funds to go up and then bash the companies that are responsible for it going up.

They are PUBLICLY TRADED COMPANIES, meaning people just like those reading this forum are the one's that own the company. There is no "Darth Vader" sitting in a room counting the zillions of dollars.

[Howard Garner]

Several billions may be a lot of money, but they have a lots of sales as well. Look at the return on investment, not a lot different that many smaller companies.
People are happy to make $2.00 on a $20 dollar investment, but hate it when is $2billion on $20billion. But still the same profit margin. (example only)

Howard G

[David Weaver]

I'd imagine rent and what some of the places want to sell, franchise fees (if there are some), required spending for appearance probably makes a lot of difference. (what places want to sell meaning that some stations, especially the few that may still have service, too, don't seem to want to sell much gas. Around here, they're always about 20 cents or more higher).

In terms of whether or not the station owners are getting rich and sitting around counting our money, I guess there are probably some with primo locations that do well. In the last 5 years, we've had two stations go completely out of business and I live in a very populous area. I'd assume that slow creep down from high prices is where the stations make most of their money and if they didn't do that, a lot wouldn't have incentive to stay in business.

As far as the cost of gasoline, I'll complain about it when I know I could go to the effort to make it for less - and still give up most of my earnings to investors.

Cheapest here are costco and sams, always. Everyone else is within 5 cents on regular. The super bonus at sams is for those of us who have a car that demands premium (and I've tried to run mine on regular, it doesn't tolerate it). Sams is 20 cents higher than regular, and all of the stations are about 40 cents higher than regular - and their regular is already 10 cents higher than sams. So on the premium, that's roughly 30 cents a gallon.

Well, I do have one complaint about gasoline, and that is that I don't like ethanol in mine. I don't like that I get decreased mileage, higher food costs and that the fuel lines on all of my small engine stuff got eaten up before someone directed me to get premium for small engine stuff because it doesn't usually come blended.

[Greg Peterson]

They are PUBLICLY TRADED COMPANIES, meaning people just like those reading this forum are the one's that own the company. There is no "Darth Vader" sitting in a room counting the zillions of dollars.

Yeah Scott, I get it. Most of us have only ourselves to blame for the behavior of corporatists. They are simply replying to our demands for greater profits. Who here among us is brave enough to say 'bring back the higher cost jobs, even if it means my 401k portfolio will take a hit'? Sure we complain about this stuff, but only because it's easier than addressing the root cause.

Regardless, even if gas prices double over night, the industry as a whole would the last one to feel the pain. Society will need oil for the foreseeable future. Demand is not going away in my lifetime. When you start talking about quarterly profits in the billions, you are describing an entity whose scale is as massive as the global economy can support. And we're all along for the ride in one way or another. Like it or not.

[David Weaver]

Greg, without the markets there is no way for you to store productivity from one part of your life so that it can be used later for consumption.

Or as a friend of mine says when people decry the markets and business structure here...a friend worked in russia and kazakhstan...."OK, Comrade"

[Brad Schafer]

Question of the day....Why do they still sell mid grade gasoline? Most cars take 87, some take premium 91, can't think of any that recommend mid grade 89.

Rick P

<digression>

most 2 cycle engines require 89. local dealer told me 87 "burns up 2 cycle engines" ... and the saw manuals call specifically for 89. a nice stihl saw of mine lost an engine due to this. older 4 cycles don't care for 87 either (e.g. 1956 Ferguson 35 tractor).

</digression>

as for gas price fluctuation, welcome to the world of commodity pricing. cost is a complex problem - over-regulation, (goofy, IMO) EPA regs, artificial limits on acquiring/refining our own supply, political deals with [pick favorite entity], variable tax rates, etc. removing the effects of politicians and popular culture would go a long way toward changing this, but that requires some pretty massive change.

meanwhile, Gas Buddy is a pretty useful thing.

[Brian Elfert]

Locally, there are gas stations all over the place that have gone under since 2008. A number have been torn down and redeveloped recently. Strangely, the station closest to me closed their convenience store and moved the convenience side of the business into a tiny little side office in the same building. The convenience store area was relatively new and was very nice. No idea why a gas station would abandon the most profitable part of their business.

[Rich Riddle]

Down the street, there are three stations at the entrance/exit of an interstate. A few weeks ago the news did a story concerning why those stations charge an average of 40 or 50 cents a gallon more than other stations a couple of miles from them. Stations long ago stopped making the mythical 2 or 3 cents a gallon.

[David Weaver]

I don't think they're making 2 or 3 cents a gallon now, they're dealing with gas that's 3 or 4 times the price. What do we think they're making, though? I don't know, but credit cards companies extracting 8-10 cents per gallon are probably doing just as well as the gas stations are. I just can't imagine station owners screwing around with the concessions/conveniences in the gas stations if gas was so profitable. The two stations near me that have closed are the only two in the area that were selling only gas and cigarettes. Figure in the middle of the day, they always had a couple of cars pumping gas (highly populated area). If you go down the road here, the more popular stations probably have a steady stream of two or three times as many cars on the pumps, and get gas deliveries at least daily.

If they can't keep a station running with somewhat constant business, they can't be making that much on the gas. The stations that do pump a lot of gas and have a lot of customers are also the ones with the best concessions/conveniences. I'd imagine after they amortize the cost of their pumps and tanks and environmental compliance and maintenance, they probably don't make much money on gas, otherwise the two cigarette only stations would've stayed in business - it only takes one person to operate those types - there's literally only room for one person in their buildings.

[Dan Lee]

Who is really making the killing on gas? Well here in California total Fed/State/local taxes are north of 70 cents a gallon, pretty nice ROI.