Piqued by Petrol

Every day I bike past an intersection with a gas station on three of the four corners.  The nice thing about biking is that my speed gives me time to pay attention to the prices at each place each day.  This leads (as is wont to happen while biking) to thinking about gas prices far more than is warranted. Here are some of those thoughts and what answers I could find so they occupy your commute:

  • Each station has a different price – a 0th level economic analysis would say that this makes no sense. Shouldn’t the more expensive one get no business assuming the gas is the same? However, there is a more sophisticated explanation (or at least an interesting and satisfying story) of why the price differences make sense.
  • Whenever I pay attention, the prices seem correlated to how the market is doing (the market was down this morning, as were gas prices by about 10 cents.) I might start playing a game where I note the gas prices and guess how the market is doing while biking to work, checking my accuracy when I get there, and recording the results.
  • Throughout the price fluctuations, the Arco station at the corner (as well as Arco stations along my ride) always has the lowest price. This confused me until I did some research and discovered that it is due to something I rarely consider: the fact that retailers have to pay a fee to accept credit cards. It might also be due to supposed lower quality, but I suspect that’s just a manifestation of the ‘if it’s cheap it must be inferior’ fallacy. 

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