Buying gasoline can cost you more not only depending on where you fill up, but also when.
The second half of the week can cost between 10 and 25 cents more per gallon on average, according to the St. Louis Federal Reserve.
No, this isn’t another smoking gun of price gouging. But, it looks like the Midwest could be the only region in the country that experiences the trend.
“This cyclical pattern is found in many Midwestern cities but typically not in cities outside the Midwest, such as Denver,” the Fed wrote.
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Whereas Denver and St. Louis — the Fed did not use data from the city of St. Louis, just six counties surrounding it — followed the national trend in gas prices, the St. Louis counties experienced periodic spikes in the latter half of the week, prices collected at GasBuddy.com showed.
The metro-east, which consists of eight counties on GasBuddy.com, experiences the same issue.
“(Price cycling) puts constant pressure on many competitors,” said Gregg Laskoski, a senior petroleum analyst for the site.
Part of the reason is that gas stations want to lure customers into the store, where the margin of profit on snacks and other items is much higher than on gas, and then prices go up to recoup some money lost on lower prices, he said.
The Fed wrote that the price-cycling problem has to do with the number of gas suppliers. In some metropolitan areas, the more companies there are, the more competition there is, which means that prices remain steadily low. In other places, the fewer suppliers there are, the less competition they face, which means there’s a smaller need to undercut one another, and prices remain steadily higher.
St. Louis is in the middle, creating as much as a 10 percent weekly fluctuation.
Here, according to YiLi Chien and Paul Morris of the St. Louis Fed, a medium number of suppliers drives them to cut prices to attract business. Other companies follow suit, but when the price approaches wholesale costs, one supplier will raise the price, and the others go along with them.
The authors, who relied on an academic article published in the “Review of Industrial Organization,” also wrote that they didn’t find an answer for why the cycle peaked on Thursday, Friday and Saturday, though they guessed it could be that it follows demand.
So how to the stations get away with it?
“Overall, customers may not notice a pricing pattern,” they wrote, “and, even if they did, some may not find it significant enough to change behavior, thus creating an incentive for gas stations to raise prices on these days relative to others.”
It turns out that cyclical pricing may not be all that bad, either. Prices may be higher than normal on some days, but they’re also lower than normal on other days. It all depends on when you fill up.
“Given the regularity of the cycle in St. Louis over the past six months, residents can likely save a few bucks if they fill up earlier in the week,” the article said.