What's Driving Differences in Gas Prices?

That is because, typically, brand-name stations like BP or Exxon have contracts to buy gasoline from oil companies, while independent stations can shop around. So when the market is stable, those with no brand loyalty can usually offer lower prices. When there is a shortage, however, they may have difficulty finding gas to sell.

"Off-brand stations usually have lower prices because they're buying on the spot market," said Severin Borenstein, director of the University of California Energy Institute. "They don't have the branded additives and they aren't financing a national advertising campaign. But when wholesale prices go up, those places get hit the most, and so you sometimes get an inversion, where non-branded gets more expensive."

Jassim Aligabi, owner of JK Gas in Bladensburg, said he can still offer better prices than his branded competitors, although the discount has narrowed considerably. Last week he sold regular gasoline at $3.04 a gallon, about 7 cents less than the Chevron and Exxon stations charged a few blocks away. Even after trimming his profit to just pennies per gallon, Aligabi said, that was less than the savings of 12 to 15 cents he often was able to offer his customers last year. But he was making up for it by selling more.

"We make it work," he said. "If we are 1 cent cheaper, people are coming. We have people coming from five miles away."

Another culprit market observers point to as a cause of different gas prices is ethanol.

The Energy Policy Act passed by Congress last summer prompted oil companies to phase in the corn-based additive in their reformulated gasoline in place of methyl tertiary-butyl ether (MTBE). Reformulated gasoline is required in parts of the country with the worst ozone air pollution, mainly large cities and their suburbs in California and the Northeast, including the District. MTBE which was found to contaminate ground water.

While reformulated gas has traditionally been more expensive than conventional gas, analysts said, the price differential has been amplified because ethanol prices shot up earlier this year with the sudden increase in demand.

That could help explain why gas prices drop noticeably when metro drivers head into Fauquier or Clarke counties in Virginia, or Maryland's Eastern Shore, which are just outside of the reformulated gasoline zone.

"Ethanol rose to $4.75 cents a gallon. A year ago, MTBE was going for $2 a gallon," said Philip K. Verleger Jr., a Colorado-based oil consultant. "That's 30 or 35 cents a gallon right there."

Analysts differ on just how much of the price increase was caused by ethanol; some say it was pennies, others say it was much more. Ethanol prices have receded recently as more plants have come online.

State taxes on gas also lead to price variations at the pump, and how fast prices rise.

For starters, every state has a set excise tax -- in Maryland it is 23.5 cents per gallon of regular gasoline; in the District, it is 20 cents. Some states have additional taxes, and their structure has the effect of amplifying the disparities. For example, in Virginia, the excise tax is 17.5 cents per gallon, but there is also a 2 percent sales tax in locations that are part of a Northern Virginia Transportation District.