Why Is Gas $1 More Just Across Town?

By Jerry Kronenberg

"My mama told me you'd better shop around," Smokey Robinson once sang -- and that sure is true when your put gas in your car.

"Gas stations obviously charge as much for fuel as they think they can, but there's not always a good explanation as to why one station charges a lot more than another," says Patrick DeHaan of GasBuddy.com, which recently analyzed 444 markets to see which have the largest spreads between cheap and costly fuel.

GasBuddy.com, which tracks real-time prices at some 135,000 stations across America, reviewed all of its 2014 readings and found that some locales saw nearly a $1 difference between what the top and bottom 5 percent of stations charged. Given that the average household burns some 1,164 gallons of gasoline per year, sticking to the lowest-cost stations and avoiding the pricey ones could save drivers in those markets around $1,000 annually.

Where the Spread Is the Largest

GasBuddy.com found the biggest price spreads primarily in California. Marie Montgomery of AAA's Southern California chapter believes that's partly because a small number of oil companies operate in the Golden State, meaning gas stations often pay sharply different wholesale prices depending which supplier they use.

She adds that many California cities attract tourists that stations in popular areas hit with high prices, whereas locals often know of cheaper places to fuel up. "We definitely recommend that drivers shop around," the expert says. Montgomery and DeHaan say people who live in areas with big price spreads can also save money by:
  • Using technology. GasBuddy.com and AAA offer free smartphone apps that can help find the cheapest gas along your route.
  • Refueling often. "You don't want to let your fuel gauge run down to 'E,' because then you'll be desperate and might be in an area with high-priced gas," Montgomery says.
  • Hitting truck stops. When in doubt, buy gas at truck-stop chains such as Pilot/Flying J or TA/Petro, DeHaan says. He calls them a "sure bet" for low prices because they want to attract customers who visit their restaurants and convenience stores.
These are the areas where GasBuddy.com found the biggest differences.

5. Santa Barbara, California (Average Difference 72.1 Cents)

This Pacific Coast community some 100 miles northwest of Los Angeles has lots of fancy neighborhoods and tourist areas where customers often pay big bucks for fuel. "Stations in the more-affluent areas of Santa Barbara are going to charge more for gas than those in less-affluent, borderline areas do," DeHaan says. In spot checks in April, GasBuddy.com found that recent local prices ranged from $2.94 a gallon at one Santa Barbara spot to $4.79 at a station in nearby Goleta.

4. San Francisco (Average Difference 76 Cents)

San Francisco gas-price differentials are about as wide as the point spread on Oakland Raiders games these days. DeHaan attributes the gap to hefty prices that drivers often pay in the city's central business district, where land for service stations costs big bucks. Recent Bay Area prices ran from $2.85 a gallon at one San Mateo station to $3.89 in Foster City.

3. San Bernardino, California (Average Difference 81.4 Cents)

The U.S. housing bust hit San Bernardino hard in recent years, but some parts of this metro area some 60 miles east of Los Angeles remain affluent -- leading to a big spread in gas prices. "You have have areas that are very expensive for gas and areas that are very cheap," DeHaan says. AAA's Montgomery adds that prices vary widely at stations along San Bernardino's heavily traveled freeways (Interstate 15 and Interstate 215) depending on how much competition a retailer has nearby. Prices in the metro area recently ranged from $2.89 to $3.49.

2. Washington, D.C. (Average Difference 82.9 Cents)

Washington's high- and low-priced gas stations have about as much in common these days as President Barack Obama does with the Tea Party. DeHaan notes that local business magnate Joe Mamo owns a big chunk of the metro area's service stations, which some D.C. officials claim leads to overpriced gas. (The courts have so far sided with Mamo, who didn't return a call seeking comment.) The District's prices varied by far more than a buck a gallon recently, from $2.28 at one D.C. Costco to $3.89 at an Exxon in Southeast.

1. Bakersfield, California (Average Difference 85.5 Cents)

Experts say prices in the region, about 120 miles north of Los Angeles, often differ depending on how close you are to nearby Highway 99 and Interstate 5. Bakersfield "is a pass-through community for the vast majority of people on the freeways," Montgomery said, so stations that cater to out-of-towners often charge big bucks, while those popular with locals typically get less, she says. GasBuddy.com found several retailers near Highway 99 and Interstate 5 charging $3.99 a gallon recently -- more than a dollar above the $2.73 that one low-priced station in nearby Shafter was offering.
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