AMARILLO, Texas (KAMR/KCIT) – As noted by GasBuddy’s price reports for the week of Dec. 5, the national average price of gasoline fell below its year-ago level for the first time in 670 days – or more than a year and a half. The price tracker said that the downturn in price could continue through the month and possibly even reach an average below $3 by Christmas.

However, despite the optimistic forecast and prices dropping nationally, some drivers across the U.S. have continued to feel the extra pressure at the pump.

In Texas, as gas prices started off December at their lowest levels since January, gas prices ranged from around $2.29 per gallon to $4.49 per gallon, a difference of $2.20.

Although the current prices in Texas appeared to be among the cheapest in the country, according to GasBuddy’s latest price map, the gap in price between areas (or even just between parts of a single city) is stark.

Why is there so much gas price variation between counties, cities, or even stations?

According to the U.S. Energy Information Administration and other industry experts, including those with the Panhandle Producers & Royalty Owners Association, there are a few key factors that can impact fluctuations in gas prices and variations between different gas stations, ranging from how the gas is made to who’s writing the price tag.

Distance between suppliers and retailers

The EIA also described that the distance between retailers and gas suppliers has an impact on price, noting that retail gas prices tend to be higher the farther the source of supply is from where the gas is sold.

However, comparing gas and oil production data for 2022 from the Railroad Commission of Texas and GasBuddy’s price map, some areas such as Crane County were experiencing higher average prices than neighboring communities despite producing billions of barrels of crude oil and metric cubic feet of gasoline. While supply and retail distances do seem to impact price points, it may not be a clear ratio or the most weighty variable in the situation.

Retail competition, decisions and operating costs

Alongside broader economic, industry and environmental factors, the EIA and other industry experts noted that another factor in gas price variation can be found in the retailers themselves. Gas prices tend to be the highest in areas with fewer gas stations, and stations located closer together might have different traffic patterns, rent, and other supply circumstances that factor into prices.

Further, as noted by PPROA president Judy Stark during an interview with MyHighPlains.com, each company has the right to sell gas at the price they choose. Supply and demand, the cost of business, relationships with competitors, and company decisions may be reasons why Texas, let alone its communities, may see a noticeable difference in prices.

Supply chain disruptions and costs

As described by the EIA, disruptions in the supply chain can impact gasoline production and prompt increased bidding for available supplies. Pipeline disruptions, refinery maintenance or shutdowns, crude oil supply and prices can be influenced by any number of factors, ranging from weather events to the global impacts of situations like the COVID-19 pandemic or Russia’s invasion of Ukraine. In turn, those supply chain “links” can cause gas prices to fluctuate.

While the supply chain is often viewed from the perspective of gas prices increasing, recent downward trends in the costs of crude oil and the state of the U.S. dollar, as noted in recent Reuters reports, as well as other factors may be contributing to decreasing prices.

Gas formulas and the cost of production

In the last few months of the year, many refineries across the U.S. shift the formula they use to produce gasoline. As previously reported on MyHighPlains.com, “winter gas” costs less to make and fills the market during times of the year when there is generally a lower level of demand, which contributes to lower gas prices.

Altogether, drivers in Texas and across the US can still save on gas costs anywhere by using strategies such as comparing local prices, using gas station apps or websites, timing the days to buy and methods of paying for gas, adjusting driving habits, and others.