Why gas prices vary from station to station

A driver fills up her tank as cars pull up to a gas station in Alhambra, east of downtown Los Angeles, on October 10, 2012.

Don't look now, but gas prices are on the rise again -- 45 cents in the past month, 33 straight days of increases, according to AAA.

Sure, oil prices are going up too, but how does it work down at the retail level? Why is one station $4-a-gallon and the one down the road $4.05? We called a guy we know who runs a gas station. Oz Elam has a place on Boston Post Road in Pelham, N.Y.

Right now, gas at Elam's station is going for $3.99. Elam said he came up with the number by checking his wholesale numbers and the shipment costs. "Then I'll make a quick ride around the neighborhoods, I check my margins, add a couple pennies. But we think the $4 is the red line that we shouldn't cross...$3.99 is definitely much more effective than $4."

Contrary to popular belief though, Elam said he isn't making money as the price of gas goes up. "Everyone blames the markets; I think it's Wall Street. I know we are not making, I know my wholesaler's not making as much money as the people think." Most of the revenue he makes these days, he said, comes from his convenience store. He said he can make at least a 30 to 40 percent profit margin off the coffee he sells.

Still, he hears the complaints of the high gas prices from customers. "It is ridiculous," he said. "Of course they cannot go to Wall Street or they cannot contact the wholesaler. We are the only person they have contact with; of course they complain to us."

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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