But Breedo is somewhat relevant
Yesterday I got gas at a BP for $2.56/gallon and saw prices ranging from $2.53 to $2.99. Today the same BP station was at about $2.79 and the price range on the road was about $2.65 to $3.15. Additionally, the overnight price shock seems to have set off large lines at the cheaper stations (no surprise really).
What I found interesting was that Exxon and Mobil, which generally are the highest priced stations in an area tended toward the lower end today. Several generic stations had some of the highest prices.
My hypothesis (not really developed enough to be a theory) is that the lower priced stations have somehow locked into a lower supply price for at least a period longer than overnight. This can be done by long term contacts or futures market hedging. Brands such as BP and Exxon/Mobil have the additional advantage of being fully integrated companies who are essentially hedged by the fact that they are suppliers to themselves. My guess is that the generic stations with high prices have little choice but to pay overnight prices for their supply and therefore must charge enough to at least break even or choose not to sell gas at all and risk losing all their customers.
What is interesting is that the stations with presumably lower supply cost (especially the brands that are customarily premium priced) are not taking better advantage of their position by marking up their prices under the generous umbrella provided by the competition.
My best example is the main street in my town, where the generic station is priced at $3.15 while the Exxon down the street (within sight) is priced at around $2.75. To top it off (bad pun, I know), the Exxon has much longer opening hours.
Any thoughts?


















