Why fuel prices vary from town-to-townBy BRYAN DAVIS PUBLISHER,
Gas prices have taken a tumble over the past month, dropping in most places to below $2 a gallon.
Prices in Indianola have been hovering between $1.60 and $1.70 for the most part, but there’s one neighboring town that has seen prices consistently below $1.50.
That’s the small town of Leland.
Several E-T readers have reached out and asked us to look into the price difference.
On Tuesday afternoon, gas in Leland ranged from $1.35 a gallon to $1.39 across five local stores.
In Indianola, the range was between $1.65 and $1.88.
While Double Quick CEO Tom Gresham could not get into specifics about the commodity’s pricing, due to federal and state anti-trust laws, he did offer The E-T some insight on the factors that often determine pricing in a particular market.
“Wholesale prices change many times during the course of a day,” Gresham said in a statement. “Taxes, delivery charges, freight, inventory levels and local market conditions all have an effect on our retail prices. We react accordingly to these changing conditions to remain as competitive as possible in each market. We work hard with our wholesale suppliers and our transport carriers to offer high quality fuel and other consumer products at competitive prices.”
While prices are definitely lower, Leland seems to be an anomaly even in its own Washington County, where prices in Greenville, aside from a couple of locations, look more like Indianola’s.
According to gasbuddy.com, Indianola is right on target with the average gas price in the state at $1.67 on Tuesday afternoon.
According to the National Association of Convenience Stores, taxes, fuel blends and other issues such as volume, brand, competition and real estate all play a part in the price of gas in a particular market.
Profit margin per gallon is also a key factor.
“The profit margin of a gallon of gas can vary widely depending on where the store is located, competition from nearby businesses and fuel retailers, and the brand of fuel being sold,” according to NACS. “In general, the average profit margin of a gallon of gas can range from 5 to 10 cents. In the U.S., gas sales at convenience stores account for 70% of revenue dollars but only 38% of profit dollars. In other words, gas sales drive customer traffic, but in-store sales drive the business.”