Why You Might Not Be Seeing $1.99-Per Gallon Gas Prices

Across Northern Virginia, prices at the gas pump have plummeted from a year ago when they were about $3.28 per gallon, according to AAA.

But prices per gallon vary across Northern Virginia by as much as 47 cents, from $2.43 a gallon at an Exxon on Jefferson Davis Highway in Arlington to $1.96 a gallon at Hillwood Mart in Falls Church, according to Gas Buddy on Sunday.

Sometimes the gas prices vary widely within a jurisdiction; Arlington County is home to some of the lowest gas to be found, at $1.97 per gallon, to some of the highest, at $2.43 per gallon.

But certain areas, according to a quick check on Gas Buddy, show that you’re not going to see that lower range of gas prices.

If you live in McLean, Reston or Vienna, you’re likely not going to see gas prices below $2.11 or so. In Arlington, Alexandria and Falls Church, you’ll see a wider price per gallon, from $1.96 up to $2.43, this weekend.

Here’s the “price spread” for one gallon of regular gas on Sunday (you can check for the most recent updates here) in several communities across Northern Virginia according to the gas price site:

• Alexandria: $1.97 to $2.39: Cheapest gas (one of three stations): Hess, 4808 King St.
• Arlington: $1.97 to $2.43: Cheapest gas, Arlington Auto Service, 5200 Columbia Pike
• McLean: $2.11 to $2.25: Cheapest gas, 1698 Anderson Road, cash price
• Reston: $2.16 to $2.29: Cheapest, Sunoco, 11190 South Lakes Dr. and Twin Branches Road
• Vienna: $2.16 to $2.29: Cheapest gas, one of three stations, Shell, 2530 Cedar Lane and Park Street

Here’s the answer to why we don’t see the same gas prices across the board, from a report in 2005 by the Los Angeles Times:

“The primary culprit is zone pricing, a secret and pervasive oil company strategy to boost profits by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors and other factors.”
“To be sure, other industries vary prices by area too. Supermarkets, for instance, price the same brand of bread or cheese differently in different neighborhoods. But gasoline price patterns provoke a response that bread can’t match, partly because other commodities don’t fluctuate as wildly as gasoline does and their prices aren’t posted by the side of the road.”

This 2013 LA Times article notes: “Tupper Hull, a spokesman for the Western States Petroleum Assn., an oil industry trade group...said zone pricing can benefit consumers in some cases.

“Some station owners are looking for the highest volume they can achieve in sales, and those stations are always competitive,” Hull said. “Other stations are going less for volume but more for brand loyalty, to capture motorists who aren’t interested in driving around to look for different options.”

According to the Times Herald-Record: The price differences reflect myriad issues including:

• delivery costs
• volume sold
• the station’s proximity to major highways
• the oil company’s perception of the populace’s ability to pay

Sometimes, independently owned stations lack the flexibility to respond to lower market prices as quickly as ones owned by oil companies because of other expenses associated with their businesses, like food marts and delis, the Herald-Record article notes.

Reuters News Service reported the seven-month, nationwide downward spiral in oil prices stopped in late-afternoon trading Friday. Oil prices surged 8 percent — up $4 a barrel. The Reuter report said it’s the biggest one-day gain since 2009, according to the San Diego Reader.

The cause of the price spike? The industry’s reduction of U.S.-based oil rigs, down 7 percent in the past week; and, Reuters noted, “reports of Islamic State militants striking at Kurdish forces southwest of the oil-rich city of Kirkuk.”

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