Why do gasoline prices vary from place to place?
Gasoline prices differ from place to place due to a number of factors including differences in market structure, local competition and costs. Generally, in smaller communities there are fewer stations so competition is not as intense. Sales per station may be lower and so a higher margin is required to cover the fixed operating costs in these communities. Isolated communities may pay higher gasoline prices due to higher transportation costs of delivering product to these communities. In some locations, retailers have been able to diversify their businesses. Gasoline is sold in conjunction with other businesses such as car washes or convenience stores. With more revenue to cover their fixed costs, these retailers are able to sell gasoline at lower margins, resulting in lower prices to consumers.
