Gas Prices

Tips on Where to Buy the Cheapest Gas

Jason Towes , co-founder of GasBuddy.com , an online network of more than 173 gas price information Web sites and 900,000 price spotters that helps the consumer locate low gas prices, was online Thursday, April 27, at 1 p.m. ET to talk about the network and offer suggestions to consumers about where to buy fuel.

A transcript follows.

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Jason Toews: Hi everyone. Glad to be here. I'll be around for the next hour to answer your questions related to gas prices, or www.GasBuddy.com.

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Fairfax, Va.: Thank you for your great work with Gas Buddy. I wonder if you would consider posting a "bad guy" list? Each of us knows of a few stations in and around our neighborhoods that are consistently much higher than other stations. They never seem to suffer for what seems to be their greedy extra year -- probably because people have short memories.

Jason Toews: There already is a "bad guy" list of sorts on the site. It's the listing of the 15 highest stations on our local sites. We want to put the emphasis on the lowest priced stations instead.

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washingtonpost.com: GasBuddy.com

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Washington, D.C.: Hello,I'm moving cross-country around August, and I'm driving a U-Haul. It could get pricey. Does your site offer any sort of e-mail notification service? For instance, if I could say what approximate zip code or city I'd be in on a particular day, it could e-mail me the best prices on that day or the day before?

Am I making sense?

Jason Toews: Unfortunately, we do not have an email notification service right now. We will be launching a wireless web app for mobile phones soon though.

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Laurel, Md.: Is there anything wrong with off-brand gasoline? I often buy gas at Royal Farms.

Jason Toews: There is nothing wrong with "off-brand" gasoline. They get their gas at the same refineries as the major gas stations.

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Bethesda, Md.: How does one know that the gas one buys for $2.90/gallon at station A is comparable to that selling at station B for $3.05/gallon? Is there any governmental agency that routinely monitors this? I ask because sometimes when you buy something cheap you get a deal, but sometimes you just get what you pay for.

Jason Toews: Gas stations are monitored by the government. Gasoline comes from the same refineries for all stations. Some stations have some extra additives in the gasoline that usually do not impact gasoline significantly

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Burke, Va.: Isn't it true that when adjusted for inflation, gas prices today are much cheaper than they were in the late '70s and early '80s?

Jason Toews: This used to be the case when gas prices were below $2/gallon. The all time high when adjusted for inflation was set in Sept 2005 @ $3.08/gallon. The current US average is $2.920/gallon.

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Frederick, Md.: How much is high oil prices due to the fact the oil production is now falling for 33 out of 48 of the largest oil producing countries?

It seems that "peak oil" is a fact not a theory -- these countries have hit "peak oil".

Jason Toews: The total world oil production has not fallen. There certainly may be some validity to the "peak oil" theory. Oil is definitely a non renewable resource.

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Orlando, Fla.: I believe that part of the problem concerning price per barrel is the futures market, and their speculative "fever" which, either rightly or wrongly, can greatly influence the price per barrel of crude. Even though I am a capitalist with social tendencies, is there anything that the U.S. government can do to rein in these markets?

Jason Toews: Unless the government wants to start regulating the price of oil & gas, this will not happen. It goes against the free market system.

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Up but not do, WN: Hi Jason,

I have a question that maybe you can answer. When oil prices go up there is an almost immediate reaction on pump prices, but when oil prices drop, there is not an immediate reaction at the pump, and the excuse is that "this is for futures ..."

So oil prices going up is an immediate change, but prices going down are for the future ...

Jason Toews: Gas prices have been rising significantly over the past 6 weeks. Although the media likes to make out that gas prices are rising because of the sudden increase in crude oil, it is more complicated than that. Refineries switch over from a winter driving blend to a (more restrictive & costly) summer driving blend in the spring. This is a large factor for the increases at the pump. You must also keep in mind that crude oil has been relatively high all winter long, spending most of the time above $60/barrel.

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Alexandria, Va.: Excellent timing with the Web site! Not as good as an Exxon shareholder, mind you ...

About how much of the cost of a gallon on average can be attributed to "brand"?

Jason Toews: We've actually been around for 6 years, and is not something that we just created in reaction to high gas prices. Even when prices are low, you can still save upwards of $0.30/gallon.

Retail gas stations are very competitive. They usually use their brand as a way to get people to the station. These days, with near record prices, most people are looking for a good deal, rather than a "brand".

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Rockville, Md.: Thanks for being here with us.

What do you think are the principal reasons for outlandish gas prices? We're told there's no present shortage, but that "investors" have driven crude prices. We're told that the big companies are exploiting; that competition is narrowing, that even neighborhood operators are cashing in while they can, in the absence of any government oversight.

Please rank the underlying reasons you see for the rise.

Jason Toews: High crude oil prices are the primary reason for the high gas prices. They make up between 50-60% of the cost of a gallon of gas. 4 years ago, crude oil was around $17/barrel. Now it is over $70/barrel.

Everyone wants to point the finger at everyone else. OPEC says there is no shortage, and that they're not to blame - but guess who's making the most off of these high prices!

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Washington, D.C.: A lot has been made of the huge profits posted by Big Oil. I myself find these profits extremely troubling. Oil demand is so inelastic Big Oil has little incentive to reduce their profit margins. Corporations are designed and required to put the interests of their shareholders first. So while I do not like Big Oil, I honestly cannot blame them. It's the oil consumers who really shoulder the blame because they keep demand so high.

Jason Toews: In a capitalistic/open economy, this is going to happen. They are driven by shareholders and profits. Unless the government is going to start regulating the industry more, there is little we can do about it.

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Washington, D.C.: Hi Jason,

I have to admit, I am one of those "I told you so" people. I live in D.C. and walk or Metro to work, shop, dine, etc. I don't drive an SUV.

I have no sympathy whatsoever for people who bizarrely live miles and miles from jobs, shopping, etc., and drive these huge vehicles that get lousy gas mileage.

I just want to say, it is your own darn fault gas prices are clobbering you. Perhaps you will learn your lesson and move closer to your jobs, etc., and buy a smaller car. But we all know it is easier to just complain.

Thanks for letting me have my say.

Jason Toews: We escalating housing prices, people need to move further and further away from city centers/jobs to be able to have a nice houre/yard/dog. Unfortunately, this seems to be families that are starting out, and don't have unlimited resources. Also, since they are a family, they need a vehicle that can fit a family.

I'm not trying to say that this is right or wrong - this is just what people want!

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Greensboro, N.C.: Today I had to get gas on my way to work. It cost me $30 to fill my tank at $3 per gallon which I think is a little absurd, so today when I came to work I did a little research and some math and this is what I figured out.In 2005 America used 146 billion gallons of gasoline. In 2005 the top 5 oil companies are going to make roughly $113 billion in profits. This means that for every gallon of gas $0.77 is going directly to profits for the oil companies. I understand that corporations need to make a profit but 25 percent of what I'm paying at the pump seems less like a reasonable profit and more like excessive greed.

Jason Toews: There's no doubt about it that the oil companies are having record profits. They are driven my shareholders and the market to maximize profits. If there is enough public outrage, and people start consuming less, then they may have to decrease prices. Keep in mind that the gas stations themselves have razor thin profit margins due to the competition for the ever increasing price sensitive consumer.

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Washington, D.C.: Do you think they'll find price gauging on behalf of the oil companies or is it really just a supply and demand issue and that because of that, we'll have to put up with it?

Jason Toews: I doubt they will actually prove price gouging. This is usually more of a political maneuver than anything. There are a number of factors that are making up the high prices, including high crude oil prices, the changeover from MTBE to ethanol and the ethanol shortage, and the time of year - prices always increase in the spring/summer due to the more stringant boutique fuels.

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Annapolis, Md.: What I don't understand is that a price at a particular station will be one price when I go to work in the morning and 11 cents higher when I go by in the afternoon. There is Shell station in my area that gives 5 cents off on Tuesdays, but on Monday the price goes up 10-15 cents from Sunday. Are the dealers pocketing the increase ... are they paying that much more from the manufacturer?

Jason Toews: They usually increase the prices MORE than they have to, and then the gas prices go down through competition between the stations in the area. When gas prices are going down, they usually do it in smaller increments of a cent or two per gallon. When they are increasing, they usually go up 5-10 cents per gallon or more.

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Fairfax, Va.: So what can be done? Why do we have to just suffer over this? Are there reasonable alternative fuel methods we need to really enact?

Jason Toews: In the short term, very little can be done. In the long term, we need to start consuming less fuel, by changing our driving habits and driving a more fuel efficient vehicle. Alternative fuels are at least 15 years away from having a significant impact.

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Burke, Va.: At what price will people start significantly altering their consumption habits? I read recently that overall volume of gasoline hasn't gone down.

Jason Toews: We are running a poll this week where we ask if people are changing their driving habits. 73% of people are saying that they are trying to conserve as much as possible.

See the poll here:

http://www.gasbuddy.com/GB_Past_Polls.aspx?poll_id=286

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Mitchellville, Md.: It seems to me that there is a need to regulate some commodities if they have such an impact on the world economy. Even though it may go against the free market, wouldn't oil be such a commodity?

Jason Toews: I doubt that it will happen because it goes against the principles of what this country was founded on. If the prices continue like this, the market will eventually take care of through means of alternative fuels. It may take a number of years for this to happen, but increasing gas prices may accelerate the development of these fuels.

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Lemming Rd., Va.: How far out of you way do you go to save 7 cents a gallon without burning up your savings on the trip out of your way? Ponder the problem.

Maybe just cutting out a 12-mile round trip a week will drop your gas consumption and your weekly costs.

Jason Toews: We don't advocate driving far out of your way to save money on gas, since you waste your time and money driving there. However, a lot of the time, you can find cheaper gas somewhere along your daily commute, or perhaps just a few blocks out of the way. It pays to look for cheap gas - just try to plan it in with you daily trips.

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washingtonpost.com: washingtonpost.com:Poll (GasBuddy.com)

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Atlanta, Ga.: Georgia use to have cheapest gas in the nation. It seems like we have now caught up to the rest of nation. I know new additives have been added to cut down on pullution in Atlanta, but is this the reason why our gas has caught up to the rest of the nation?

Jason Toews: We have created a new gas prices temperature map:

http://www.gasbuddy.com/gb_gastemperaturemap.aspx

It shows the price of gas around the country by color coded prices. It certainly does show that Georgia is in the middle of the pack for prices, and Wyoming, Montana and Utah have some of the cheapest prices.

It has a lot to do with supplies of gasoline and additives like ethanol (with the changeover from MTBE). I would expect this to be short lived, and you should see cheaper prices again in Georgia - at least relative to the rest of the country.

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Silver Spring, Md.: Just an observation...I don't think people really and truly "care" about $3/gallon gas. I work in the traffic business, and every day, going to and from work, I still see cars and SUVs doing 85-90 mph on stretches of the Beltway, and even faster on Route 50 in Maryland. If people were really worried about gas prices, they would change their driving habits, and I don't see that happening yet.

Jason Toews: Most cars get optimal fuel economy at 55MPH. When you dive above this speed, you are wasting preceious gas. You are right. Many people do not care about gas prices, and are driving fast as usual.

This is just one of the ways that we waste gas. We have some helpful fuel saving tips here:

http://www.gasbuddy.com/gb_tips.aspx

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washingtonpost.com: Temperature Map (GasBuddy.com)

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Rockville, Md.: Can you provide comparative $ figures on the amount of tax imposed by D.C., Maryland and Virginia jurisdictions per gallon of gas? I've always been under the impression that Maryland has the highest local gas taxes.

Jason Toews: This is the info that we have on taxes:

http://www.washingtondcgasprices.com/tax_info.aspx

You can also find out what gas prices are around the country at this page:

http://www.gasbuddy.com/GB_Price_List.aspx

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Annandale, Va.: I have to make a comment about all these charges of 'gouging.' Three years ago, I could have sold my house for $400k. Now, if somebody wanted to buy it, it would cost them $600k. Same house. Am I gouging the buyer? Is the realtor who is now going to charge me $24k more to sell my house making a windfall profit? Are higher real estate taxes that have been driven by the housing market windfall profits for local governments?

All these sums can buy a lot of gasoline. Yet we scream at spending more for gasoline.

Jason Toews: That's why people are increasily turning to the internet to sell houses by owner, on sites like www.Craigslist.org and www.SuperAds.com. People don't like to pay these high commissions. But that's getting a bit off topic!

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washingtonpost.com: Fuel Saving Tips (GasBuddy.com)

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Baltimore, Md.: Jason,

I've been using a GasBuddy.com affiliated site for over a year now and have found it helpful. My friend stumped me with a question just yesterday though. By using a gasbuddy.com affiliated Web site, how can he (or anyone for that matter) search for the lowest reported prices for diesel fuel for his VW, or beyond that, premium fuel prices?

Jason Toews: We have an option for diesel on our site, as seen here:

http://www.baltimoregasprices.com/index.aspx?fuel=D

At the current time, we do not cover premium.

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New Orleans, La.: Down here in the Big Easy, we've made a living off the oil and gas industry for a long time. I didn't hear any complaints from Yankees in the 1980's when the price of oil was $6/barrel and over 500,000 people lost their jobs. Can't people understand that the real test for profits is the rate of return on investment? Where does the oil industry come out here? Above at or below U.S. averages?

Jason Toews: I have heard that it costs between $15-$20/barrel to get oil out of the ground. Certainly they have a lot of profit worked into the price of crude oil!

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washingtonpost.com: U.S. Fuel Tax Rates By State (GasBuddy.com)

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Canadian Gas, : Jason, I see that gas in Canada is a bit cheaper according to your Web site. Are people living near the Canadian border filling up in Canada to save some bucks?

Jason Toews: Actually, the gas prices in Canada are MORE expensive, due to factors like higher taxes.

See the page below for a direct comparison of US & Canadian gas prices in US $/G:

http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24

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washingtonpost.com: washingtonpost.com:City and State Averages for the USA and Canada (GasBuddy.com)

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Olney, Md.: We often hear that prices for gas here are nothing compared to the rest of the world (i.e., Europe) But what is the base price of gas compared here and in Europe? If you took away all taxes, would we be paying more or less for gas than say in France?

Jason Toews: The price of gas would be much closer, if you took taxes out of the equation. However, there are other factors that determine the price of gas too, most notably the emmisions standards and the boutique fuel/driving blends that are required by law. Take a look at California for a good example of that.

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washingtonpost.com: washingtonpost.com:Lowest Diesel Prices in the Last 48 Hours (GasBuddy.com)

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Leesburg, Va.: I recently received an e-mail, that is supposed to be sent on to many people, in which someone suggested that we stop buying gas from one major company, in this case Exxon. The theory being that if millions of people stopped going there, they would have to lower their prices to get customers and in doing so, the competition would also lower their prices to keep business. How effective do you think something like this would be?

Jason Toews: I don't think a boycott would work. The reason is that many people don't care enough about it, or many people forget. You could never get the levels of participation required to have even a slight impact on the price of gas.

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washingtonpost.com: Historical Price Charts (GasBuddy.com)

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Fredericksburg, Va.: Since gas has now passed the three dollar mark in my hometown. I have the following question.

How much gas are we using to sustain the currrent wars on a daily basis?

Thanks

Jason Toews: I don't have that info, but I doubt it has a significant impact on the price of gas, when you take into the millions of vehicles on the US roads every day.

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Response to Silver Spring: The reader from Silver Spring noted that people seem not to be concerned about gas prices. I think for the average D.C.-area resident, it is not that big a deal. If you assume that the average person fills up 3 times a month at 15 gallons per fillup, the difference between paying $2.00 per gallon and $3.00 per gallon works out to $540 more per year at $3.00 per gallon. Many, many people in the D.C. area make well over $100,000 a year. $540 just doesn't hit as hard when you make that amount of money.

Jason Toews: That is exactly the problem. Even at $3.00/gallon there is a significant portion of the population that is doesn't care. They just pay the high cost and live with it. Why else do you think we have all of these big SUV's, and cars with ever increase engine size on the road these days?

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Washington, D.C.: I paid the equivalent of $7.25 per gallon for diesel for a rental car in the U.K. last week .... sure does give you a new perspective here!

What are the chances that your Web site will add a way to compare prices for the higher octane fuels? One of my cars requires 91 octane or higher.

Jason Toews: We are considering addin other fuel types to the web site. We want to ensure it does not ruin the user experience and the intuitiveness of using the web site!

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Fairfax Station: It seems gas prices are more a function of refinery capacity then the price of a barrel of oil. What's the incentive for an oil company to invest a lot of money in a refinery which will increase capacity and lower prices when they can make more money by keeping inventories tight and prices high? we aren't talking about morality with big oil.

Jason Toews: There is not much incentive, when they are making such high profits. They are driven my shareholders and profits.

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Jason Toews: Thanks for all of you questions. I thoroughly enjoyed it! I'd be happy to answer further questions via email from our web site: www.GasBuddy.com.

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