How do gas stations all change their prices at the same time?

By Kirk Mason (mason@wsbt.com)

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By Jason Overholt

Story Created: Feb 3, 2010 at 1:04 PM EDT

Story Updated: Feb 3, 2010 at 1:04 PM EDT

Joan Davis of Edwardsburg has a Good Question: “Are all gas stations on some kind of internet network, because they all change their prices at the same time?

The prices are often not exactly the same, but the price changes at gas stations often do happen at similar times. We put the question to two economics professors ‒ one at IU South Bend and another at Notre Dame. Both say competition is the leading factor ‒ when one station changes a price, the other nearby changes to be competitive.

Another factor is the price of crude oil. That's set on a worldwide level, so when those prices fluctuate, that impact effects all gas stations at about the same time.

And another key factor is oil distributors. Often gas stations in an area will use the same distributor, so the impact on their prices from a distributor can be felt at the same time.

According to AAA, right now the national average price regular unleaded is $2.65. Both Indiana and Michigan are below that: Indiana at $2.54, Michigan at $2.57.

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