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Regional economics drive gas price changes

Gas+prices+in+the+El+Paso+area+can+fluctuate+by+more+than+a+dollar+depending+on+which+station+you+stop+at.
Sergio Zamora
Gas prices in the El Paso area can fluctuate by more than a dollar depending on which station you stop at.

According to GasBuddy.com, a crowd-sourced gasoline price aggregator, gas prices in El Paso can differ by more than a dollar depending on which station you purchase at, and this may end up costing students money. While no station will always have the lowest prices, accounting for economic factors that affect what you pay at the pump could help students’ budgets.

“If the gas station by my house has it more expensive than around school and I have enough gas I’ll pump at school,” said Katie Gallegos, a junior marketing major. “If I don’t have enough gas then I have to put it just enough to get me to school so it’ll be cheaper.”

While gas prices are determined by a variety of different factors, seeing why they differ is not an exact science. Variables such as income, inventory levels and seasonal demand can all have an effect on what drivers pay at the gas pump, but weather and global changes can cause some of the elements to have a smaller effect than usual.

Tom Fullerton, an economics professor at UTEP, believes that inventory levels are for the most part what determines gas prices in El Paso

“Probably what is going on (in El Paso) is gas prices are being driven by inventory levels,” Fulleton said. “Inventory accounts for the supply and demand.”

When gas stations such as those on the West side are spaced farther apart they have less direct competition, which raises prices. Another issue that comes up with certain stations being farther apart is the demand is concentrated more on particular stations, which drives their gas inventory down and increases prices more than the lack of competition by itself.

The data from GasBuddy, however, shows that although prices at spaced-out stations are generally higher, no side of town is more expensive as they all fall under a moderate 25-cent range. This 25 cent difference would mean paying $3.75 more to fill up a 15-gallon tank if filled at the more expensive station instead of the cheaper.

Something particular to El Paso, Fullerton said, is the added option of people not only going to a different station down the street in search of lower prices, but also crossing the border. He explained how, if prices are low enough in Ciudad Juarez, some may go south in search of cheaper fuel. The threat of losing customers to another country could bring prices down in the Sun City.

However, prices are not the only point of discussion when it comes to pumping gas. Some students think the gasoline sold in Mexico is not of the same quality as the U.S.

“Sometimes, if I’m already in Juarez, I’ll pump just enough to get over the border,” said Karen Hernandez, a junior education major. “The gas doesn’t last as long, so it’s not worth much, even if it’s cheaper.”

With gas prices being as steady as they are throughout the region, Fullerton said we may expect the cost of filling up at the pump to decrease throughout the next few months.

“Right now we’re in a period of demand decline until around Thanksgiving,” he said.

Fullerton detailed how expanding economies raise prices, while recessions bring them down. With the summer driving season over, the lower demand could bring gas prices down, until people start driving home for the holiday season from Thanksgiving to New Year’s Eve.

Julio Cesar Chavez may be reached at [email protected].

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Regional economics drive gas price changes