WASHINGTON — Anyone who has ever bothered to drive out of the way to reach gas pumps with lower prices knows that a gas price can vary widely from state to state, city to city and even from neighborhood to neighborhood.
Gas prices track crude oil prices, but there are many other factors that affect prices at the pump.
“The biggest factor on retail prices is the wholesale price, and wholesale prices can vary widely,” said Jeff Lenard, vice president of the National Association of Convenience Stores.
“It’s quite possible that two places almost next to each other could have significantly different wholesale costs.”
A gas retailer’s wholesale cost can vary, depending on whether the fuel is a name brand or not; the length of the retailer’s contract with the supplier; and the volume of fuel the retailer tends to pump.
Of course, taxes have a big impact on gasoline prices, with taxes varying from state to state. But local taxes, too, including property taxes, can play a role.
“If you’re [a gas retailer] on the outskirts of town, your property taxes, real estate taxes are less than if you’re in that highly trafficked, highly sought-after four-way intersection,” Lenard said.
Gas station operators have long pointed out that they have little say in setting prices.
“Usually they mark up prices about 20 cents a gallon, after expenses like credit card fees, so they usually make about a nickel a gallon,” Lenard said.
“Most of the costs are taxes, wholesale prices and other things that impact that ultimate price,” he said.
More gasoline is being sold today to consumers at convenience stores, and prices can be impacted by business strategies, Lenard said, with retailers taking into account in-store traffic and business volume throughout the year. Gas stations near airports might demand a higher price than a less-visited station in a quiet part of town.
One positive note right now about gas prices: They usually rise in the spring by about 50 cents a gallon as refineries make the change from winter- to summer-blend fuels. But because of the robust supply of oil, Lenard said, gasoline prices haven’t risen much from where they were in February.
“What we have right now is we still have a glut of oil,” he said. “Oil prices are depressed. … That downward pressure on oil prices is also keeping gas prices at a fairly moderate level.”
