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Why does gasoline price vary from one station to another?

This is a very common situation that you must have come across. You pull into a gas station and fill up and when you drive down a block another station offers you gas that is 20 cents less of what you’ve paid for in the previous station. You must be wondering how the distance of a block away reduces the cost of gasoline. They vary over states, time and regions. Now you ask what factors influence the price? There are several factors which lead to the fluctuation of the price some of which are mentioned below:

  • Disruptions in supply

Increase in gasoline could be noticed due to slow or no gasoline production bidding gasoline supplies. Refinery shutdowns, pipeline disruptions, unplanned refinery maintenance can lead to disruptions in supply of gasoline. Usually, this happens when hurricanes hit the US. Prices will remain relatively high if the gasoline transport system cannot fulfil the flow of surplus supplies from one station to another.

  • Distance from supply

The farther the source of supply from where gasoline is sold, the higher the retail gasoline price tends to be. This is because the transportation cost increases with the increase in distance from the source of supply.  The supply source includes ports, refineries, pipeline and blending terminals. Thus, the distance of the supply source from that station is inversely proportional to the cost of gasoline.

  • Environmental Programs

Certain areas of the nation required to use reformulated, special gasoline by adding additives to reduce smog, carbon monoxide and toxic air pollutants that are released when gasoline is burned or it evaporates. One-third of total gasoline sold in the US is reformulated keep the environment clean. These programs add to the cost of storing, producing and distributing gasoline. The environmental program also includes restrictions on fuel storage or transportation.

  • Retail competition

In locations having fewer gasoline stations, the pump price tends to be higher because there is more demand than the supply which forces people to buy without considering the price. Even when there are closely located stations they may have different rent, traffic patterns, and sources of supply influencing the price.

Bottom Line:

All these complex factors which are mentioned above leads to different retail price for gasoline within a particular region. We hope that you’ve got your answer now. By keeping in mind the above-mentioned points, now you can find a gas station in your area which provides gasoline in a much lower amount.

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