What happened to Free Enterprise at Gas Stations?

[Methuselah]

Economic theory says that sellers with the lowest prices will have the most sales, and those with much higher prices will eventually go without business. I’m a cheapskate, so I’ll drive a mile further to find a station with the lowest prices. In CA today (it changes fast) the lowest price per gallon is just below $6.00, and the highest price in my neighborhood is $6.60. The places with the highest prices stay in business. They are not as busy as the lower-priced stations, but they do have customers. It’s been shown that most brands get their gasoline from the same train tankers. There is no difference in what they sell. Why don’t all buyers look for the lowest prices? It would encourage lower prices for all?

[datsunaholic]

The same reason people buy name brand anything. Marketing. Plus some folks value their time over saving a few cents a gallon. The stations around here that are already over $7/gallon still do business, especially when the places still at/around $5.50 a gallon have long lines.

While most gasoline comes from the same refineries, the additives are added at the delivery truck. The difference is negligible, but there is a difference.

[Long Run]

Economic theory says that sellers with the lowest prices will have the most sales, and those with much higher prices will eventually go without business.

All things being equal. As Datsun notes, location is very important. It is worth noting that it is not the local franchise owner of the station with higher prices pocketing the difference -- that is most likely driven by modeling that shows X% of people do not pass by other gas stations in their normal driving pattern, so the oil company figures they can charge a higher price and come out ahead.

[BoSoxGal]

I have an abundance of gas stations to choose from in my normal travel radius, but no, I’m going to drive extra or out of my usual travel path to save $1.20 on a tank of gas. (My tank is ~12 gallons, probably more like 13 I have never run it empty.)

If there was a case of one station being 20, 30, 40+ cents cheaper per gallon maybe I would, but most stations around here are within ten cents of each other and to my way of thinking it just isn’t worth the extra potential for traffic aggravation and possibly an accident (the more miles you drive, the higher the odds you’ll get crashed into by some Masshole idiot driver) to save such a small amount.

I’m also the person who refuses to join stupid member plans at gas stations who give a ten cent per gallon discount in exchange for your personal info which they then use to inundate you will advertising BS.

Perhaps this is why I’m not rich. ETA: I do drive a 23 year old car so in that regard I’m a little like Warren Buffet.

[Burning Petard]

What happened? The little gas station became no longer independent. I once ran a no-name gas station in Michigan (1969-72) Open 24/7 It was the first convenient stop for trucks coming from Canada and the Polaris warehouse for snowmobiles/jet skis. We sold A LOT of diesel fuel. The other two other stations in town did not have a big enough yard to easily move a big rig through. And they were closed at nite. We had a step ladder to wash their windshield and free coffee. Also did plenty of auto gas business. But I had one source (Total) for 'product' (nobody in the business calls it gas or fuel) I bought from them or I did not get it. They also dictated my price at the pump. I was one cent a gallon cheaper than the Sunoco station in town, 5 cents cheaper than the Shell. Sunoco had a blender pump that mixed regular (92 Octane) and Premium (98 octane) to give 5 different prices. [at this time in other parts of the state Gulf had a cheaper than regular 90 octane unleaded] This was the rule. We all got our 'product' from the same place and they had somebody driving around to check. We all changed our price up or down when we got a phone call telling us to change.The Sunoco guy broke the protocol once--posted price on the big sign was way down. In small blue letters against a black background it said 'plus tax" That lasted about 3 days.

snailgate

[Scooter]

Gasoline supply is oligopolistic and subject to price fixing. Any independent retailer attempting to deviate too far off the expected retail price will be punished, either by having the big name stations launch a price war that the independents can't withstand for more than a few days, or by cutting off their supply until they conform.

[MGMcAnick]

I’m also the person who refuses to join stupid member plans at gas stations who give a ten cent per gallon discount in exchange for your personal info which they then use to inundate you will advertising BS.

My stupid member plan has saved me 25¢ per gallon on 410.32 gallons of gas since a new station opened in December. I keep expecting it to drop to a 10¢ discount, but so far so good. It is right on my 20 mile commute route, so I don't go out of my way, other than down the off ramp and up the on ramp. They gave me a free 32oz fountain drink this morning, and charged $4.349/ gallon for ANY grade. My old Chevy truck got premium, just because it could. I've checked the MPG, and premium makes NO difference bcause it is designed to burn regular. The MPG is dismal in any case. I've not noticed any advertising that I can attribute to them. I'm completely satisfied.

[Long Run]

[Methuselah]

I'm not aware that we have the option to use a member plan in the SoCal area. I'll be looking around for one. Note that here the difference between stations can be sixty cents a gallon, not ten cents. It will be interesting to see how many gasoline stations get closed as Electric Vehicles become more used.