LAUREL COUNTY, Ky. —
It’s no secret that gas prices in Corbin are often lower than gas prices in London, sometimes by as much as 20 cents per gallon. According to UK Economics Professor and Senior Associate Dean Kenneth Troske, there are many factors influencing gas prices, and why those prices might vary so much from city to city.
Things that factor into price fluctuation are state and federal taxes, the cost of turning oil into gasoline and the cost of additives in the gasoline. Other factors are sometimes purely in the head of the consumer.
“Sometimes it’s in people’s perceptions about prices, said Troske, who pointed out that gallons of milk may also vary greatly from one city to the next. Troske did acknowledge that a big component of fluctuating prices has to do with competition.
“Stations are competing with each other,” said Troske, who said that stations next to the interstate are the most competitive because they are the most likely to lure long distance travelers. He said that these stations will purposefully drop their prices to “get them in there and get them to go to your store.”
Getting customers to come to the market is where the station makes true money anyway, according to Troske.
“They make more money from the items in their store than from the gas,” said Troske. “They don’t make a big profit off the gas.”
Gas stations aren’t the only businesses that employ this business technique. Troske said that “Wal-Mart purposely prices their gas below their competitors.” This incentivizes consumers to fill up gas at Wal-Mart, which in turn motivates them to go into the store to buy more products.
Troske also points out that different cities get their gas from different refineries, which may have differing rates, due to supply and demand being different in different areas.