Message #54175

[countrigal]

Too true Dettu, but why is the price different from Shell station to Shell station (or BP to BP) in one town?

Answer:  Each station is responsible for ordering their own gas.  Yes, the over-all station-type may have an order for gas at $X/gal, but each station, depending on when they place their order, may be locked in at a slightly different price.  Ie:  Say I'm the main supplier for BP gas, and I have 400 gallons of gas that is priced at $2.20/gal, and another 300 gallons comes in today at a price of $2.50/gal.  Now Store 1 ordered gas yesterday, asking for 300 gallons, so the price they locked in at was at $2.20/gal.  Store 2 also orders 300 gallons, but they order it today.  Now I have 100 gallons left of the $2.20/gal, but the price has now climbed to $2.50/gal on my most recent gas, so I charge Store 2 $2.50/gal for all 300 gallons they get, making my profit rate higher on this transaction.  So now Store 1 can price their gas lower than Store 2 and still make a profit.  Of course, if the price for my gas had dropped, say came in at $2.00/gal instead of $2.50, I would still sell the 300 gallons to Store 2 at the 2nd price ($2.00) and they would then be cheaper than Store 1.

CountriGal
Peer Moderator