Ask LAist: Why Does The Price Of Gas Vary So Much Between Stations?
Here at LAist, we report stories that answer your questions.
And whenever gas prices soar, readers like you will ask us some version of this question:
“Why are LA County's gas prices so wildly inconsistent? I've seen gas stations mere blocks away from each other vary by as much as 70¢/gallon.”
To find out, I called up UCLA Anderson Forecast senior economist Leo Feler.
He told me the price of the gas itself is only one — of many — factors that gas station owners consider when deciding how much to charge customers at the pump.
“How much does it cost for the underlying land? What is the amount of rent that they are paying to be on that corner? How many other gas stations are around that are competing with them and putting pressure on them?” he explained. “If their gas prices are too high, [will people] just drive a little bit further, somewhere else?”
They also have to consider how the gas price will affect traffic to the convenience store on-site, where sales account for a significant portion of the gas station’s profit, according to the Association for Convenience & Fuel Retailing.
That’s why prices can vary so much around town, or even on the same street or corner. Each station is considering these unique factors and making the business decision that works best for them.
When gas prices are as high as they are now, Feler said drivers, too, will adjust their buying behaviors to take advantage of those differences.
Like if they happen to see cheaper gas on the way to work or shopping somewhere like Costco or Walmart — they’ll buy that cheap gas incrementally, instead of waiting until the tank is empty.
Those who can’t or won’t switch to public transit or walking may also adjust their driving habitsto make ends meet.
“On the margin, what people might do is say, ‘Okay, well, maybe I will work remotely an extra day a week and save on gas prices that way,’” Feler explained. “'Maybe I will try to be more strategic in terms of the errands I run so that I'm not crossing town so much.’ But really, we have to think about a grander picture of how L.A. is built and whether or not that's sustainable.”
Because in the big picture, Feler pointed out that while this price surge is particularly steep, the cost of energy and transportation costs will continue to get more expensive as resources "dwindle and populations increase."