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Why gas prices vary from station to station in Austin

KVUE Defenders investigated why gas prices vary from station to station and what you can do to save.

If you haven’t noticed already, gas prices are higher now than they were at this time last year. And they’re gradually going up every week. The higher they go, the closer consumers might watch price differences between stations.

Always looking out for your bottom line, the KVUE Defenders investigated why gas prices vary from station to station and what you can do to save.

It may seem easiest to pull into the gas station closest to where you work or live. The Defenders found where the difference can cost Austin-area drivers up to 30 cents more per gallon and possibly hundreds of dollars more a year.

For example, suppose you drive your car 13,000 miles each year and you get 22 miles per gallon. If you’re paying 30 cents more per gallon, that’s comes to $177.27 a year. If you add more miles and/or get fewer miles per gallon, it adds up even more.

So, why do gas prices vary so much? The answer depends on who you ask.

Market analyst Patrick DeHaan says “it depends on the degree of how oil prices are changing and how much.”

Paul Hardin, president of the Texas Food and Fuel Association, says price variance is more about where the gas comes from and whether or not it’s branded or unbranded gas. Generally, branded blends like you find at Shell or Exxon stations have additives and often cost more than unbranded blends without additives like you might find at Sam’s Club, Costco or H-E-B.

Who’s right? Well, they both are. The KVUE Defenders analyzed the gas price breakdown.

Today in Austin, gas ranges per gallon. Fifty-three percent of the price per gallon is the cost of crude oil, 17 percent for the refining, 12 percent for distribution and marketing, and the one constant of 38.4 cents per gallon for state and federal gas taxes. That leaves only pennies in profits for the retailer.

“Fuel is a pennies game,” says Paul Hardin. “… pennies margin game.”

Harden says the stores make very little off gasoline sales compared to what’s sold inside. Contracts with fuel distributors can set one station higher or lower than another one across the street.

“Fuel is a commodity. It’s traded like stocks are. From the time it’s in the ground, at a refiner, throughout the whole process. It’s traded,” Hardin explained.

We studied “the trade” around Austin. We weren’t surprised to find a wholesale, non-branded blend at Sam’s Club to be the cheapest. At the Exxon station near William Cannon and Escarpment, gas was more than 60 cents higher -- $2.59 a gallon.

Apps, like Gas Buddy, show you the prices in your area. You can check your route to work and check for the lowest prices.

We also found instances of gas cycling. It’s a version of a gas war. Stations continuously compete to lower the price of fuel until they can’t take the hit. Then, the price shoots back up.

Planning ahead can save you hundreds of dollars.

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I saved $4.90 filling up my car! It was 35 cents off the pump price. Think about it. If I keep this up, it's a free tank of gas each month. It could be about $250/yr savings. This is NOT an ad, but I did think it was worth sharing. I learned about this from Terri Gruca KVUE. What a great tip! KVUE

Posted by Erica Proffer on Friday, January 12, 2018

If you have a story tip for the KVUE Defenders to investigate, send an email to defenders@kvue.com or call 512-533-2231.

Follow Erica Proffer on Twitter @ericaproffer, Facebook @ericaprofferjournalist, and Instagram @ericaproffer.

Follow Joe Ellis on Twitter @JoeEllisATX.