Why do fuel stations have different prices for gas? We found out for you
Gas prices in Texas continue to stay high, with the state’s average price at $4.65 as of Monday.
According to the American Automobile Association, the Texas’ average price is a cent less than it was a week ago, but is 36 cents more than it was a month ago.
In Tarrant County the average price of gas was $4.79 at the beginning of the week, an increase from the previous week’s average of $4.68, according to AAA, the national federation of motor clubs.
Despite gas price averages, drivers may notice slight changes in prices depending on the station they visit.
Why do some gas stations have lower prices than others? Here are some factors that play into how gas is priced.
What determines the retail price of gas?
Gas is sold and priced in three different grades — regular, midgrade and premium — with prices increasing by grade type. According to the U.S. Energy Information Administration, the retail prices of these grades are determined by the cost of crude oil, refining costs and profits, distribution and marketing costs and profits and taxes.
Gas prices are often highest in areas with fewer stations, but even stations close together may have different traffic patterns, rent and sources of supply that influence pricing, the EIA reports.
What does gas money go towards?
Over 50 percent of what consumers pay at the pump is for the cost of crude oil, which is determined mostly by supply and demand.
The average regular grade gas price in the United States was $3.01 per gallon in 2021. Out of that number, 53.6 percent went toward the cost of crude oil, according to the EIA.
After crude oil prices, federal and state taxes get the second highest cut from retail gas prices. In 2021, taxes made up 16.4 percent of the regular grade price of gas. According to the EIA, total state taxes and fees on gasoline averaged 31.02 cents per gallon in January this year.
Distribution and marketing gets the third most with refining costs and profits coming in last. In 2021, they made up 15.6 percent and 14.4 percent of the cost of regular grade gas, respectively.
How does location play into gas prices?
Distance from gasoline supply impacts the retail price of gas. The EIA reports the farther away gasoline supply is compared to where it’s sold, the higher the price will be because of transportation costs. Supply sources include refineries, ports, pipeline and blending terminals.
Because Texas leads the nation in petroleum refining and chemical products production, the state is able to maintain relatively lower gas prices compared to other states in the country.
Impacts to gasoline production, such as pipeline disruptions, refinery shutdowns or maintenance, can also increase prices.
Do seasons impact gas prices?
Gas prices have shown certain trends depending on the time of year.
According to the EIA, gas prices gradually rise in the spring and peak in late summer when people drive more frequently. Generally, prices are lower in winter months.
Gasoline specifications and formulas are different depending on the season as well.
During the summer months, gasoline should be less prone to evaporating in the warm weather, according to the EIA. This means refiners must replace cheaper, more evaporative gasoline components with less evaporative, more expensive components contributing to higher prices in the warmer months.
This story was originally published June 21, 2022 at 10:34 AM.
