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Why do some fuel prices differ from station to station?

It may not be for the reason you’ve long assumed

Do you pay attention to the fuel prices in different places you drive to? Why aren’t they the same? PHOTO FROM PIXABAY

Ever wonder why fuel prices often vary from station to station? We’re not talking here about one station located in Metro Manila and another one situated in a nearby province—or even about prices of competing fuel brands. We’re referring to pricing variance within the same fuel brand and between neighboring outlets (even ones on the same street).

The popular assumption is that pricing is generally dictated by a station’s location or distance from its brand’s nearest depot. While this is also true, how do you explain the discrepancy in pricing between outlets that are merely several blocks away from each other? Surely, this differential is no longer down to their zip codes but to something else.

That something else, it turns out, is competition. According to the brand manager of a top fuel company—who requested anonymity, for obvious reasons—a gasoline station’s prices are usually influenced and determined by the presence (or absence) of rivals in the neighborhood. Meaning: If circumstances are ideal, pricing tends to stay consistent with average figures. But if competition is stiff, it could go down to levels that consumers would drive an extra kilometer for.

A gasoline station’s prices are usually influenced and determined by the presence (or absence) of rivals in the neighborhood

“A dealer will sacrifice margins just to attract customers and lure them away from rival stations,” the oil industry executive told us.

This explains why some gas stations traditionally have lower pricing than others. In fact, some of us motorists keep a list of stations with very competitive fuel prices. But with the traffic congestion these days, driving a couple of extra kilometers just to save a few bucks at the pump may no longer make sense.

You’re simply lucky if you live (or work) in an area where competition among fuel stations is cutthroat.

Vernon B. Sarne

Vernon is the founder and editor-in-chief of VISOR. He has been an automotive journalist since July 1995. He became one by serendipity, walking into the office of a small publishing company and applying for a position he had no idea was for a local car magazine. God has watched over him throughout his humble journey. He writes the ‘Spoiler’ column.