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Understanding Gas Price Moves

Posted By Jim On 05/02/2006 @ 7:09 pm In Cars,Frugal Living | 3 Comments

According to one of the co-founders of gasbuddy.com, there’s a dominant gas station brand in every area and it’s typically owned by the company that has the refinery in that region. That dominant brand is the one that sets the price at its stations and their competitors simply match it. It’s in line with “Extreme Saver” (of CNNMoney’s series) Clare Cheesman’s [3] experience. She says that she “buy[s gas] in the middle of the week. Monday’s are bad. If it goes down it will be on a Tuesday, Wednesday or Thursday.” It’s good information to know (that competitors will lag the dominant brand) but Clare may be reaching the wrong conclusions with it.

I think there are so many x-factors when it comes to the price of gasoline in a particular area that this strategy can easily backfire. I blogged about how I go to an Exxon by a Costco because Costco drives down the price [4] (and I can use my 5% cashback at Exxon), but there is a newly opened BP station that has the best prices because it’s trying to capture market share in the area. Finally, you have state or local laws that come in to play such as now the New Jersey Turnpike’s gas stations can only adjust their prices once a week.

So, I wonder how many times Clare has waited to buy gasoline only to find that the price as spiked?


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[3] Clare Cheesman’s: http://money.cnn.com/2005/11/10/pf/saver_cheesman/

[4] Exxon by a Costco because Costco drives down the price: http://www.bargaineering.com/articles/costco-gasoline-neighboring-stations.html

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