How does the station owner of brand A at location 1 know to raise the price at the same time and to the same amount as the station owner of brand F at location 6, nine miles away?
And so do owners B through E at locations 2 through 5...
The managers or assistant managers keep an eye on each others prices. If brand A goes down two cents, brand B will lower their price by the same. It’s all based on the current trading price of crude oil.
Now what gets me is that when gas went to 4 bucks a gallon under obama, oil products went sky high too but when gas prices came down, did oil product prices? Nope.
Never understood why motor oil is 4 times the price of gasoline either. From what little I understand about oil based products, the more refining, the higher the price BUT motor oil takes way less refining than gas. Oil has way lower liability than gas due to flammability too so oil should be like a buck a gallon. Guess we’re paying through the nose for that plastic bottle.
IT IS THE RUSSIANS!
Because their costs all go up together because ultimately they buy the gas from the same places.
The C store chains all have the price computerized. A message from the home office raises or lowers the price at all pumps at the same time. No on site human involvement.
Most gas stations are not owned directly by the oil companies, but are franchised out to marketers.
The marketers know their territories, and will adjust their prices locally as they drive around and observe the competition. Those other stations may also actually be theirs, too, so the same marketer might be raising all the prices at once.
-PJ
“How does the station owner of brand A at location 1 know to raise the price at the same time and to the same amount as the station owner of brand F at location 6, nine miles away?”
There are only a couple of major wholesale price indices. The smart station owner watches the indices daily, usually several times a day. Timing purchases by the volume in your tank versus the direction of wholesale prices is an art, but that’s how it’s done.
If you have a tankful of $1.44 per gallon wholesale gas, and the new wholesale price is $1.65, if you don’t raise your price, you won’t have enough money to replace the gas in your tank. Since most larger new stations have 10,000 to 15,000 gallon tanks, we are talking about a chunk of change to refill a tank.
A lot of stations do well to make 15 or 20 cents per gallon. Most don’t do that well. Say you are making only $.07 per gallon, and wholesale prices go up $.09 per gallon late Friday afternoon. You didn’t notice it, but your competitors did and raised prices. Monday morning your weekend manager will be crowing about the volume of gas sales, but you will be refilling your tank at a loss.
That’s why, as another commenter pointed out, most stations rely on sales of snacks, drinks, etc, to keep the lights on and the doors open.