Why is fuel cheaper in some areas compared to others?

Pray the low-fuel indicator doesn’t light up where gas is expensive
by Drei Laurel | Jul 13, 2018
Fuel prices in PH, fuel, fuel price
PHOTO: Dinzo Tabamo

Have you ever found yourself in line to top up at a fuel station only to see that its rates are slightly different—whether cheaper or more expensive—than at your suki?

No, global fuel prices didn’t suddenly fluctuate some more while you were waiting for your turn. Rates actually vary from station to station, even if they’re under the same petroleum company. So what gives?

We talked to a couple of people familiar with the industry, and as it turns out, there are a number of factors at play.

Transport plays a role

The price of fuel will depend on how much it takes to get said fuel to a station from the depot. In far-flung places such as Baguio, fuel prices can be significantly more expensive. The biggest difference we’ve seen at the Summer Capital is a whopping P13 per liter. Rates are also often higher on expressways.

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According to one source, the prices at certain pumps are also affected by competition from other companies in the area, especially new players. He described these instances as ‘price wars.’ A separate source shared the same sentiments, saying that prevailing competition usually results in lower prices, while the absence of competition brings higher ones.

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The mechanism of fuel price changes

It sounds like a dog-eat-dog business. So where does this leave us consumers? Well, don’t worry too much. Our source tells us that local fuel stations will have to ask permission from a petroleum company’s main office before they can apply price adjustments. So no, your neighborhood go-to for top-ups can’t just change its prices anytime it pleases.

This isn’t the whole picture by any means, but it should give you an idea of how the business of petroleum companies works on a local level. Do you have any other questions regarding fuel prices? Let us know in the comments.

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PHOTO: Dinzo Tabamo
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