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Why are some gas stations still higher than others as prices fall?

Posted at 5:51 AM, Aug 02, 2022
and last updated 2022-08-02 07:01:19-04

(WXYZ) — Gas prices continue to take a tumble and have been going down for more than 40 consecutive days. For the first time in months, Michigan is below the national average for gasoline.

A gallon of gas is now around $4.19, which is about 90 cents lower than a month ago. But, as you drive around metro Detroit and the state, you may see some gas stations have drastically different prices than others.

That could be for a number of reasons. It can depend on when the station purchased its gasoline and how quickly they sell it.

Alex Kinnier, the co-founder and CEO of Upside.com, said local market forces play a role in the different gas prices.

"So for instance, it's the only local station in a certain area or maybe it's a more expensive area so that station may have higher rents that it may have to pay, or they might be able to get away with slightly higher prices because of the competition in the area," he said.

It can all come down to the location and supply and demand, so gas stations with high volumes of gas and those that are refilling their tanks quicker are going to have the cheaper gas.

Nidhal Hamama has owned and operated an Exonn station in Farmington Hills for 28 years. SHe said she sells nearly 10,000 gallons of gas in just three days, giving her thea bility to keep her prices lower.

"They deliver the gas. They don't take the money right away. I have to sell it. They give me three days so I almost sell it all. So I am using their money. I am using their gas. I sell it and then I pay them after," Hamama said.