When pumping gasoline these days, it’s nearly impossible not to feel some pain.
Previous records continue to be crushed each day across the nation. On Friday, Virginia — averaging $4.26 for a gallon of gas — officially eclipsed the old record achieved in March by a penny.
Sometimes the amount of pain inflicted while pumping depends on the location. For example, there was a spread of 27 cents Friday from the cheapest gallon of gas to the most expensive in Danville, according to data from GasBuddy.
Explaining the lack of a level playing field is no easy task.
While a plethora of factors play into setting gasoline prices, other equations drive why stations only a few miles apart can be on opposite ends of the price spectrum, Morgan Dean, a spokesperson for AAA Mid-Atlantic explained to the Danville Register & Bee.
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“With the price surges we’ve seen lately, it can also come down to who has had a delivery and who hasn’t,” he said.
Here’s one situation: a station may have received a fuel delivery on Monday when the price was $3.99 a gallon. If that location doesn’t sell a lot of gas, that price may still be the same by Friday.
On the other hand, a station just up the road that sells at a higher volume may be up to $4.15 a gallon because it received a delivery Thursday when costs increased.
Some places — like a convenience store that makes most of its income from inside sales — can afford to price gas a little cheaper in an effort to lure customers inside.
“When that happens, other stations nearby often have to drop their prices to match or lose business, but they may not be in the same position to ‘eat the cost’ from gas by making up with coffee, food or snack sales,” Dean told the newspaper.
Other factors like chains getting gas in bulk on a contract can cause the variations.
“It can also come down to how far a station is from the terminal where the truck picks it up,” Dean explained, noting there are costs associated with just transporting the gas. That’s especially true for tanker trucks operating on diesel, a fuel that’s also soaring to new records.
Dean also tossed out another reason for the pricing disparity: convenience.
“Stations near the interstate usually charge more because they can (and because their property is more expensive than something down the road, off the beaten path) as drivers are willing to pay a little more for the convenience of being able to get right back on the road,” he wrote in an email.
How did we get here?
Similar to a game of cat and mouse, pump prices generally chase the costs of crude oil, Dean said.
In March, crude was selling for nearly $76 a barrel. For the last two months it bounced around $100. On Friday, it was selling for nearly $110.
“The old adage about pump prices is that they go up like a rocket and fall like a feather,” he said. In March, Russia’s initial invasion of Ukraine rattled markets and sent crude oil prices sky high temporarily before slowly leveling off.
Pump prices — based about 60% on crude oil — eventually started to slide after those highs in March.
The most recent jump was triggered when the European Union announced plans to ban Russian oil within six months.
A set of demands
Higher demand typically means higher prices.
“We’re likely to see much higher demand in the next few weeks as school gets out and many start their summer trips,” Dean said. “We typically see a seasonal jump in May in pump prices as higher demand usually means higher prices.”
In 2020, that didn’t happen because of the coronavirus pandemic that sent many people to isolate in homes instead of hitting the roads for a summer vacation.
“There’s a lot of pent up interest in traveling from the past two years where people spent much more time than usual at home and not traveling with restrictions/disruptions,” Dean said.
An April poll by AAA found that Virginia residents were ready for a summer getaway despite higher gas prices. That survey showed that about one-third of people living in the commonwealth said they plan to travel more this summer.
Many reported it would be their first major outing since the pandemic.
If more people return to the roads and skies, that demand could pump prices even higher.
Other factors — like the ongoing tension in Russia in Ukraine — could swing the prices either way.
Even before the invasion, Dean said there was “unusually high crude oil prices” in the winter after COVID-19 cases, driven by the omicron variant, started to drop. That’s when a lot of countries and manufacturing centers started to make a last-minute push to build back to pre-pandemic levels. In turn, that led to a higher demand for crude oil.
Weather is another aspect in the volatility.
“Let’s hope for a mild or non-existent hurricane season,” Dean said.
Tropical systems that form in the Gulf of Mexico tend to cause evacuations of the oil platforms there, disrupting oil production. Powerful systems can inflict damage or slice electricity to refineries across the Gulf, also toppling more dominos to spread instability.
When will drivers catch a break?
“With the volatility and fluctuations we’re seeing on the crude oil market right now, it’s hard to say,” Dean explained when asked when prices could decline again. “Pump prices have been on a roller coaster ride this year ... and it’s as if we’re all blindfolded.”
That means it’s not easy to tell if there are larger hills — and a bumpy ride — ahead.