Tyler Schipper, an economics professor at the University of St. Thomas, spoke with KSTP about why gas prices can vary widely across the metro, even between stations located close together. Schipper noted rising crude oil prices are a key driver of higher gas costs, while local competition, traffic patterns and operating expenses like rent and labor also play a role in price differences.
From the article:
“The price whiplash comes from there are different demand factors that different gas stations are going to respond to,” explains Tyler Schipper, an economics professor at the University of St. Thomas.
He notes that next-door or across-the-street competition can mean lower prices, while high-traffic and affluent areas have higher overhead costs.
There can be variations, Schipper says, in rent, property taxes, labor costs and customer service.
“I have time in my day,” he says, for example, “I’m going to go to that gas station instead, and that can put downward pressure, just because you have more competition and people are more sensitive to price changes.”
With crude oil prices up to $114 a barrel, Schipper says gas retailers are feeling it, too.
“They are paying more for the gasoline they’re buying from wholesalers, and those wholesalers are paying more to the refineries they’re buying from,” he notes.
