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Why are Johnson City gas prices so much higher?

Brandon Paykamian • Updated Dec 17, 2018 at 5:58 PM

Gas prices in Tennessee dropped another 5 cents last week and could continue to drop due to more oil price declines, a Monday AAA report said.

Despite the welcome news statewide, some of the most expensive gas prices were in Johnson City, which had an average gas price of around $2.20. The least-expensive gas prices over the weekend in Tennessee were found in Chattanooga, which had an average price of $1.95.

In our metro area, some Elizabethton gas stations posted prices as low as $2 per gallon, just a few miles away from some gas stations in Johnson City close to the Milligan Highway area, which have gas prices more in line with the Johnson City average.

While only a few miles separate some of those stations, AAA spokeswoman Stephanie Milani said there are many factors that play into why gas prices differ so much within such a short radius.

She said it’s a question one would have to ask each gas station owner, and it often depends on when and where they purchase their gasoline supplies.

“You also have to look at when they purchased the gas, as well as how much it was when they purchased it,” she said. “If one is a branded gas station, like BP or Shell, or another is like an independent gas station, the Shell and BP stations often have to buy from Shell and BP suppliers.

“Those other independent gas stations can buy on the spot market, so they can buy anybody’s gasoline. Depending on what prices are doing, the branded gas is cheaper because those retailers know BP and Shell are always going to buy from them.

“On the other hand, if you’re an independent gas station, you may be able to gamble more with where you get your gas. That may be to their advantage, and it also may not.

“A lot of times, it comes down to location and how much that market can bear,” she said.

Compared to Monday’s national average of $2.37 per gallon, Tennessee’s average gas price stood at $2.11 — about 30 cents less than a month ago and 10 cents less than this time last year. Analysts believe gas prices in Tennessee could eventually average $2 per gallon before the end of the year.

"Holiday travelers will have more jingle in their pockets after they fill up the family vehicle. Prices are already at two-year lows for the holidays and should slip even lower in the next two weeks. Oil prices have been unable to gain significant upward momentum after OPEC announced plans to cut production,” AAA spokesman Mark Jenkins said in a news release.

“The price of crude declined last week and should drop again this week because industry analysts are skeptical that OPEC's plan could rebalance what is currently an oversupplied market. If oil prices drop even further this week, that would reduce the cost of producing gasoline and allow additional price cuts at the pump."

For more information on local, state and national gas price trends, visit www.gasprices.aaa.com.

 

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