Getting Hosed: We All Know That Gas Prices Are Off The Charts, But Why the Disparity?

If California were a country, it would have the seventh highest gas prices of any nation on the planet
336

Thanks to taxes and emission regulations—a hefty $1.30 per gallon extra—California’s gasoline prices remain the highest in the country year after year. Angelenos are used to paying a premium for the privilege of driving the 405, but with the recent spike in costs, more L.A. motorists are turning to apps like GasBuddy, which uses GPS and crowdsourcing to display the cheapest (and most expensive) gas in the user’s vicinity. It makes sense that neighborhoods with high rent, like Beverly Hills, have higher-priced gas stations than communities with residents living below the poverty line. But within neighborhoods, the spread of gas prices is significant—often more than $1.50 a gallon—even when stations sit directly across the street from each other. Why the disparity?

Type “Inglewood, CA” into GasBuddy’s search bar, and you’ll see a list of around 50 stations with a spread of $1.60, starting at $5.09 and ending at $6.60 at the time of this writing. Compton’s spread was $1.02, starting at $5.27 at a Sinclair station and ending at $6.29 at a Chevron. Beverly Hills brings up a $1.50 spread, the lowest at Speedway Express at Santa Monica and Edinburgh and the highest at the Mobil at Beverly and La Cienega for $6.99. So what’s the deal?

Also Read: This DTLA Gas Station is Charging More Than $8 Per Gallon

The manager at a relatively cheap station in Palms seemed proud that his gas was the lowest in the area. “We are trying to give back to the community while we keep a business running,” he says. “I mean, prices are high. We see prices like $6.29 just a couple streets back.”

California Gas Prices graph
Illustrated by Neil Jamikson

A couple of miles up the road was the most expensive station. The manager shared his perspective when asked why anyone would pay $30 more for a tankful when they could pull into a station across the street and get a better deal. Gas is gas, isn’t it?

“Gas is not gas,” he said. “Customers told me that when they buy lower-brand gas, like Arco, they get less mileage. Also, Arco and other lower-brand stations charge an extra $.35 fee for credit cards. Our station—no fee.” When asked what made one brand of gas better, he offered that it might be due to the refining process. “Some is not well-refined,” he said.

Also Read: California Cities Are Now Banning Gas Stations to Combat Climate Crisis

“He’s partly right,” says Mark LaCour, editor-in-chief of Oil and Gas Global Network. But it isn’t the refining process that makes the difference. The gas that comes from the five big refineries in L.A. County, he says, “with some caveats, is exactly the same. That’s raw gasoline.”

California Gas Prices graph
Illustrated by Neil Jamikson

The varying quality of gas at the pump is due to what happens after it comes out of the refinery. That’s when detergents are added, which help keep your car’s combustion system clean. “ExxonMobil spends the most on additives. Arco and Valero are doing additives, but they’re not putting as much money into it,” LaCour says. It’s not that their gas is bad for your car, he adds. “It’s good gas; it’s just not as good.”

If you don’t want to spend $6.89 a gallon for the better gas when the place next door is $5.19, LaCour has a tip—fill up every fourth tank at an ExxonMobil or Chevron. “I fill up three tanks at Sam’s, a lower detergent gasoline. Every fourth tank is from Exxon. And that works pretty well.”

California Gas Prices graph
Illustrated by Neil Jamikson

Additives aren’t the only reason Mobil charges more than Arco and Valero, though: they have different business models. Back in 2008, Exxon announced plans to exit the gas-station business. At the time, it owned only about 25 percent of the stations that bore its name—the other 75 percent were owned by people simply paying to use the name. “Exxon got rid of them. Company-owned retail stations are the least profitable part of the value chain. They’re also the hardest to manage. It’s easier to run a refinery than have to worry about potato chips and Slurpees,” says LaCour.

Arcos and Valeros, on the other hand, are company-owned retail stations, and they can keep costs lower as long as they’re willing to forgo spending money on expensive detergents. Gas stations featuring Mobil signs are privately owned, with operators buying the branded fuel wholesale, additives and all, and paying the premium for the right to use the brand name.

California Gas Prices graph
Illustrated by Neil Jamikson

Armed with all this information and your GasBuddy app, but still unsure whether to pay for the cheaper low-detergent fuel or spring for the big brands? There’s one more factor you need to consider when deciding where to fill up, and, according to LaCour, it’s the most important one: gasoline has a shelf life that ranges from around three to six months, depending on the season. Rather than worry too much about price or detergents, he says, look for the busy stations. “The reality is, you want to get your gasoline from a gas station that’s super busy. Busy gas stations are getting fresh gas almost every other day.”

Forking over your hard-earned money for a full tank of overpriced gas may trigger suspicions of foul play, but things could be worse: the cost of gas in Death Valley is as high as the temperature—$ 8.99 per gallon. Now that’s murder.

California Gas Prices graph
Illustrated by Neil Jamikson

Stay on top of the latest in L.A. news, food, and culture. Sign up for our newsletters today.