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Why The Difference In Gas Prices?

No doubt you've noticed gas prices falling recently. You probably also notice when you fill up how different prices can be from town to town, or just down the street, even among the same company in the same town. The question many want to know is why?

On October 2nd we saw gas prices in Washington at $3.44 a gallon. Less than 20 miles away in Greenville prices were $3.85 a gallon, 41 cents more.

And the story is similar across Eastern Carolina and town to town.

October 22nd in Goldsboro we saw gas at $3.24 a gallon. Just 6 miles away ethanol-free regular was $3.99, 75 cents more a gallon.

In our quest to get answers, we headed to Selma, NC where the Colonial Pipeline is located. That is where the majority of gasoline eventually sold in Eastern Carolina is first pumped into trucks and then transported our way.

Truck after truck pulls in and out of the facility 24-7. Industry experts tell WITN there's little difference, if any, in the price retailers pay for the gas coming out of the pipeline, regardless of how much they buy.

So what happens from the pipeline to the convenience stores in Eastern Carolina to cause such drastic price differences? None of the executives from the retail locations in the east WITN contacted were willing to do an on camera interview to explain. One even said he feared for his job if he talked to us.

Gary Harris is the executive director of the NC Petroleum and Convenience Marketers Association. He says competition is perhaps the biggest reason prices vary so much. "What really drives these guys is what everybody else in the market is doing"

While consumers may compare gas prices 10, 20, 30 miles away or more, we're told the competition for retailers is essentially a mile or two.

Another big factor is the cost to get gas from Selma to the retailers, along with overhead, credit card transaction fees, and whether retailers are trying to make money off the gas, or just use it to get you in the store to buy other items.

Harris also says additives drive up the cost of brand name gas versus unbranded. After all that, he says retailers are making pennies on the gallon. "Most people think gasoline retailers make tons of money off a gallon of gasoline. That's not the case, usually it's in the single digits."

Harris also says wholesale prices, what the retailers pay, contribute to the fluctuations because they change twice a day. So a store may have more expensive gas that hasn't been sold yet, while another gets a shipment of cheaper gas.

While you may have a better idea now why industry experts say the prices differ so much from station to station, doing something about the high gas prices is another story. But you can affect prices. The experts tell us when consumers seek out the cheapest gas, that helps drive down higher prices elsewhere.

There are fixed prices that all retailers pay that don't change from station to station. According to the U.S. Energy Information Administration, this is how the costs of a gallon of gas break down: 62% crude oil, 18% refining, 11% taxes, 9% distribution & marketing. The crude price is a commodity so it is set by the markets in the U.S. and around the world.


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