What They Don’t Tell You About How Gas Is Priced at a Petrol Pump

Gas stations are a closed book to us as far as we are concerned. They all charge different prices at different times, and we have no idea why that should be so. If you think that it’s something to do with the neighborhood (a higher class of neighborhood has higher gas prices), how do you explain the fact that neighborhoods seem to go in and out of being expensive – sometimes they’re the cheapest sometimes they’re not? There is more to what you are charged at the petrol pump than meets the eye. Let’s try to clear some of that up.

Did you ever notice that gas prices on the highway are always cheaper than gas prices at home? Gas stations are all affiliated each to a different oil company. Since they are branded with an oil company of their choice, they are completely dependent on them for their gas. Whatever the auto companies decide to charge them, they have to pay. And the oil companies charge different prices of different gas stations. It’s completely up to them. That would explain in part why the prices are cheaper at some locations.

The gas station owner is the concessionaire. And he makes perhaps 10 cents off every gallon of gas you pump. When gas prices reached five dollars and you were bleeding money every time you filled the tank up, did you ever imagine that you saw the gas station owner smirking at all the money that was rolling in? You’d be mistaken there. The more expensive gas gets, the less the gas station owner makes. They know that the higher the price of their gas, the less people want to buy gas. To remain competitive, they just take a hit to their bottom lines to be able to give you cheaper gas.

There is another problem when gas prices rise. When you pay by credit card, they have to pay the credit card company 2.5% of the final dollar value of what you ring up. If gas prices are high, they do have to pay a larger sum to the credit card companies. Where does that come from? It comes from out of their commission of course. They make up for it in other ways though. When gas prices actually fall, they still continue charging high prices for some time.

While on the subject of cards, be sure to never use your debit card at a petrol pump. The problem is, that you have to swipe your card before you actually feel anything. And what does the petrol pump do if you end up not having enough money in your debit card to cover what you just put in your tank? So if you are at a filling station, the moment you swipe your card, the bank will right away take out $50 or $100 to cover anything you may end up pumping. And they’ll put the money back into your account in their own time.

If you are cutting it close with the money have in your account, you could be in big trouble. And if you go pay inside with your debit card, they charge you one dollar for the trouble. Gasoline credit cards can be a bad idea – they charge a high APR. If a cobranded Visa or MasterCard gasoline card is what you are thinking of, those can be competitive, but they limit your ability to go switch gasoline brands.