There are two gasoline stations near me. The first is a Mobil station that currently charges $3.89 for a gallon of regular. Across the street is a Chevron station that charges $4.29.
That's a 10% difference, and it's nothing new. The Chevron station is always 30-40 cents more expensive than the Mobil station and has been for years.
How can this be? The Chevron station is smaller, but both seem to be pretty busy most of the time. They're both equally convenient. Both have mini-marts attached to them.
Do people in my upscale neighborhood just not care about price? Maybe, but then why doesn't the Mobil station raise its price?
Does the Chevron station not care about attracting more customers? Why not?
Aside from these two, there isn't another gas station for a mile in any direction. They have a monopoly on the local market.
What's going on?
Sometimes I pull into the more expensive station because I am on that side of the road and think to myself "I'll just get half a tank since I am on empty" but then just fill the entire tank since I am already there.
Agreed.
Yes, direction of traffic, what KD is seeing is the price of the inconvenience of making a turn across traffic. I'm assuming it's a fairly busy street if it has the only 2 gas stations on it
The rule I heard is you want your station on the right side of the road for morning rush traffic. Other things being equal, I’d assume that’s the higher price Chevron.
Marketing -- Most people can recall the gas detergent Chevron adds to their gas because they market it, while Mobil does not talk about it even though they're probably from the same refiner using the same formula.
Infamy -- Everyone can still recall Exxon (Mobil) Valdez and other accidents.
Rewards -- Grocery rewards tie-ins with Chevron gas. Earn X points from grocery and you can deduct $0.30 per gallon from your Chevron gas fill-up.
I think the “rewards” is the biggie.
Just to note on the other two:
1. Other than the additives (like the mentioned "Techron") the gasoline is exactly the same. Literally. All gasoline has to be made to very tight specs, and the fuel from various refiners all ends up at the same terminals. The additives are added as the delivery truck fills up. Obviously some additives may make a bigger difference than others, but I haven't found any credible reason to believe it's worth much.
2. I really doubt that 90% of people buying gas are consciously aware that Exxon and Mobil are the same company. Even if it were Exxon I doubt it would make much difference, but I can't imagine almost anyone avoiding Mobil gas for that reason. Hell I work in an adjacent industry and I'm always forgetting it.
Back some 65 years ago when in college one of my class mates drove a tanker for Shell. Coming back from a date I spotted him offloading. I chatted with him and found he had just returned from a Douglas refinery. His job required he pour a gallon of TCP, AKA Tomcat Piss, in 7000 gallons of gas.
I used to always go to Chevron for the rewards and then with the Safeway app I figured out that since I only have a 12 galloon tank the rewards are more valuable for Safeway discounts than for gas. So now I just use the rewards at Safeway and buy gas wherever I happen to pass when I need it. If you have a larger tank of course the math is different.
How many galloons to the myle?
Autocorrect, consistently fixing things that aren’t wrong while simultaneously missing obvious typos, and I’m supposed to be worried about AI taking over?
LOL. Well said.
Yes, obviously you should be very worried about AI taking over. But not for the reason you think. Remember, the reason for AI is reducing employer’s wage bills and not improving reliability or safety.
"Marketing". Absolutely. Mobil is the "budget" brand for Exxon-Mobil, whereas Chevron is marketed as a "Premium Gasoline", even the Regular.
The detergent thing is really old. Does anyone else remember:
"Keep your engine Keotane Clean
With Skelly, Skelly, Skelly Supreme"
What the hell is "Keotane Clean"????? But it sounds vaguely like "Octane" which used to be the gas for muscle cars.
Marketing; it's a thing.
"Keotane Klean" is probably a lot like "Market Fresh."
The 'Spirit of '76' is now the 'Spirit of '19'.
As the mashup of Kurt Cobain & Tom Scholz would suggest, it smells like a feeling.
1970s, "Mobil, The Detergent Gasoline". Grandpa worked for Mobil, gave me a pocket knife with that term on it. They also had some funny mr dirt TV ads. Grimy guy holding a garden hose spewing gray dirt and dust, which would cause my parents to compare me to him and wonder was I going to take a shower or go into showbiz. Same thing during Charlie brown xmas special.
Mentally scarred for life!
Because capitalism says pricier gas is better gas and cheaper gas is what poor people buy.
And luckily, people always make rational decisions.
Veblen gas
LOL. Pecuniary emulation.
Ah, a Veblen good. I thought very few examples of this were to be found in the wild. According to my textbooks circa 1908, that is.
Damn the lack of edit functions. That should be _1980_ , not 1908. I'll cop to being late-middle-aged, or even old (to the youngs). But not 1908 old.
Chevron gas, only for those at the seventh level of self-actualization....
Well, that must be the one for me then!
What operating thetan level, though?
Is there a difference in waiting times? I could save a lot of money if I always bought my gas at Costco. But unless I get there really early in the morning, the lines are often horrendous, and it's not worth the savings, so I buy at a local gas station.
I either go to Costco or to Union Oil. Both are cheap. With Costco I get some rebate money at year's end. For that matter when I use my Costco Visa at any gas station, I get a rebate at year's end.
My town has 2 instances of that. The more expensive gas stations are convenient to right hand turns during the PM commute. Because of the peculiarity of the street layouts, the AM commute traffic is not a reciprocal of the PM commute traffic and the equivalent right hand turns get nowhere near the traffic levels.
I bet this is what explains it.
That's what I was thinking as well. If people are getting gas disproportionately on the way home from work, then whatever station is most convenient for that can have a price increase over the other one. Not a huge one, but a noticeable one.
I live in Massachusetts. This sort of thing is rare here - at least it seems that way to me. Usually, adjacent stations have the same price plus or minus a few cents/gal. They will both change them every day. If they are not adjacent, all bets are off.
I think most people go to the gas station on the side they're driving on and pay no attention to the prices. That explains why Chevron can charge more, no idea why Mobile doesn't raise their prices though.
Hypothesis 1: different traffic flows on different sides of the street
Hypothesis 2: credit card fees and other unadvertised costs
Hypothesis 3: pricing is set remotely via some internal system, so it doesn't matter what the people across the street are charging
I literally never consider the gasoline brand or the price when I pull into a gas station. I just assume that all gas stations charge pretty much the same thing. I might prefer a nicer place over a cruddier place, all else being equal. But generally it's just, what is convenient for me since I need to get gas right now? Maybe I'm an outlier.
Here in California, ARCO is usually the cheapest. Read somewhere they had access to AK crude and that explained the lower price.
They used to take only Cash and debit cards (don't know why I capitalized Cash).
They used to, maybe still do, charge .35 for the privilege of using the debt card. That's pretty good pure profit.
Even then when buying a full tank of gas I’d come out ahead of the other major brands.
Oh, no question. Plus get yourself a 44 once Coke and a microwave burrito. Damn near paradise.
Branding and perceived value of same. Plus the rewards points from Safeway (et al) knock down the effective price at Chevron.
Then again, I buy gas at Arco, which short of going no-name is the least expensive of them all...
My ex-wife had a station. Some people really aren't too price sensitive and care about brand, so a higher priced station across the street still gets some business. With a higher price you can afford to sell a lot less gas. So the different prices make sense, both pricing approaches can be sustainable.
Kevin says the Chevron is smaller, so it is presumably selling less gas but at a higher markup. QED
Kevin, do you really want those cartoon cars to lose their Chevron gig? They gotta eat too. And how many TV ads for Mobile does one see...?
at a guess, yes, probably people in your upscale neighborhood don't care about a 40 cent/gallon price difference. but that begs the question, why doesn't mobil up it's prices 10%. so perhaps it's just enough people don't care, but there's enough that do to make it worth it for mobil to offer a 10% difference. i imagine there's the kinda micro-econ framework to determine the optimal equilibrium pricing for each gas station.
ugh, that was poorly phrased but seems like i can't edit my comments so.....
I thought it was the riches that are the penny pinchers.
I think it's the marketing campaign from long ago: "Come to Chevron Island..." with lots of Hawaii/Pacific Islander glitz and glamour. We remember... we loved those scratch offs...
Less facetiously, I'd say the numbers are totally controlled by corporate (or regional) and don't care what others nearby are selling at. Or if they are, they don't react like a day trader on crack and maybe only adjust once a week.
https://vimeo.com/291275496
There’s another possibility: if a station is making its real money doing automotive repair, it may intentionally price gas uneconomically, to keep gasoline customers away. If a automotive repair shop occupying the site of a gas station ceases to be a “gas station,” it may need to pay to decommission and remediate — dig up — the associated underground storage tanks. I’m aware of a repair shop near here that practiced that ploy for years. Local residents knew not to go there for gas!
Gas station pricing has always been a mystery wrapped inside an enigma. When I used to teach business history I tried several times to get a real answer and couldn't get anything authoritative.
The best I could do was from a sources that said prices are set by the chains at the level that will move a desired amount of gas at the desired rate. So that points to kahner and tomtom502's ideas on this-- each station moves its target number of gallons and that keeps the algorithms happy.
But I also think convenience and supermarket tie-ins matter a lot, brand loyalty apparently matters some, deceptive posted prices (cash vs credit, etc) could matter, plus some people in the neighborhood could be driving fleet cars or using employer credit cards that are bound to one brand.
Also, geez, you guys are paying 4 bucks a gallon! At that level people might just grumble and pay whatever's on the pump and figure it isn't worth quibbling over. Here in PA, where we have I think the highest state gas tax going, we're just breaking over 3 as prices have been rising for summer, and people here would certainly be shopping around if all the stations didn't already have the same prices. The Colonial ransomware thing doesn't directly touch this part of the state afaik but it's certainly going to affect us so we might be more eye-to-eye with you in a week.
Is the Chevron on the way to the airport? If so, they are probably cashing in on rental car returns filling the tank before turning it in.
I boycott Exxon-Mobile for their anti-LGBTQ stance. I boycott Chevron for their high prices. Costco and Arco work for me.
I boycott Exxon-Mobil for destroying Prince William Sound, and then spending more money to avoid paying the fines, than the fines would cost.
I boycott BP for polluting a good portion of the Gulf of Mexico.
I boycott Shell for destroying the Niger river delta , corrupting their government, and violently dealing with protestors there.
Chevron acquired Texaco which destroyed a jungle in Central America and refuses to clean it up.
and on and on..... in the end, it's not about a few extra dollars, but spending your money on the LEAST EVIL oil company that you can find.
https://earthbound.report/2008/03/10/which-is-the-most-ethical-oil-company/
In Amarillo, the priciest gas stations are usually right off I-40. People passing through don't care to drive through town to find a cheaper price, they just want to fill up and keep going.
I always try to but at the Radiocab barn in Portland. Just a block & a half from my flat, & usually 10-20 cents cheaper.
I almost never buy gas across the river in Methtown, since Washington State sales tax adds about 50 cents a gallon to the taxi barn price.
DC has a pair of gas stations right across the street from each other on New York Avenue. Their price differential is always $0.80-1.20 per gallon. I’ve heard the more expensive one survives because it relies on government spending, ie. it has an exclusive deal for some government entities and thus will always get their dollars even if it never gets anyone else to shop there.
We have one EV and one gas-powered vehicle. Since we mostly drive the EV we rarely fill the gasser, so I haven't the foggiest what gas prices are most of the time. My local gas station's prices might be sky-high, and I'd never know it during my once-every-two-months visits.
But you'd think people who fill up every week would keep tabs on pricing.
"... Across the street .."
If you are talking about the stations on Alton Parkway this is misleading. They are about a quarter mile apart and they are in different shopping centers. You probably can't easily see both prices before picking one. And one could easily be considerably more convenient depending on what else you are doing that day.
Sometimes the price shown is a 'discount' price if you have an appropriate member card / credit card. So the real price at Mobil may be higher than that. Also some stations give a discount for cash transactions and show that price, where really the price is higher.
I wonder whether ownership of the station is part of the issue. I've always assumed the name brands stations owned by the refiner are higher because the don't expect to sell as much gas, but keep that much unused fuel out in the world to create relative shortages to boost the price of gas in general, and it works out because they sell their gas to others. My father-in-law was an engineer at Chevron for 40 years. He told me not to bother buying Chevron or other name brand gas, buy the cheapest. Have been doing that for 30-plus years without ever having an issue. The additive stuff is hogwash.
Two ideas, besides rewards:
1) Is Chevron on a busier side of the street than the other? Are they banking on convenience traffic?
2) Does California have laws about advertising cash prices vs. credit prices? Is the Mobil price a cash price and they really charge more than that (often 10+ cents higher) for using a credit/debit card, while Chevron just charges the same regardless?
When I was 7, I always wanted to go to the Gulf station. I'm not 7 anymore but a lot of people are.
Let's not confuse Corporate Crony Capitalism, that rules America, with the juvenile notions of "free market" commerce that libertarians think run our private sector.