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Why Do Gasoline Prices Vary by Location?

Do you take the time to look for less expensive alternatives to fill up your vehicles fuel tank? I’ve noticed that the service stations in my neck of the woods tend to have consistent pricing levels. Some are always high, some are always low, some ride the middle line, and some are extraordinarily high. I make my fueling choices based on the 1) the quality of the fuel and 2) the price. Brand doesn’t matter, as long as it’s quality fuel.

I had to fill up a test car with premium fuel this afternoon and had a bit of extra time, so I checked the prices at a handful of local stations. I was shocked by the astronomical price difference or “spread” as it’s referred to in the biz. In this video, I compared the prices at four different gas stations in one region.


The difference between the least and most expensive service stations was a whopping sixty cents per gallon for unleaded regular. On a vehicle with a 20-gallon fuel tank, that adds up to $12 per fill. That’s a significant amount of money when you consider the costs over the course of a year. How do service stations get away with charging a huge price differential?

The transportation fuel industry is largely a monopoly, as the majority of internal combustion engine-equipped passenger vehicles rely on petroleum. The industry literally has us over a barrel. While choices do exist (like electric cars and flex-fuel capable vehicles), the infrastructure is inadequate in many locations. This is changing, but not fast enough.

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