Why does the price of fuel vary from place to place and from day to day?
Photo: Illustration: Terje Tønnessen
Briefly explained:
At a petrol station in Elverum, the fuel can cost several kroner less than in Oslo, or in the neighboring municipalities.
Local competition affects fuel costs.
During a week, the prices can vary from 3-4 kroner per. liters.
The price of oil also plays a major role in fuel prices.
Something happened in the petrol market in April 2004.
Gas dealers began to compete with each other.
Every Monday, the head office of the petrol chains set the so-called indicative price. Before the local petrol dealers started competing with each other throughout the week. Until Sunday and Monday morning, the competition took place when the week’s cheapest fuel could be refueled.
But in November 2017, the fun was over. Then the gas chains broke with their regular, weekly pattern.
Today, those who still drive fossil-fueled cars must hunt for the “cheapest of the week” throughout the week.
And in places where the competition between petrol stations is so great that prices are pushed down.
Is it the case that petrol and diesel prices are always lower in Elverum than in Oslo?
The petrol chains are first raising pump prices to the same level throughout the country. But the differences are how deeply the prices fall at the individual petrol dealer. It depends, among other things, on the competitive conditions between the petrol stations.
In Elverum, the price per liter can be two to three kroner lower than in Oslo.
– This is because the petrol stations in Elverum compete with prices even more than in Oslo. We find many such examples elsewhere in the country as well, says Øystein Foros, professor at the Norwegian School of Management, who is an expert on petrol prices. Take, for example, the stretch between Trondheim and Oppdal. Along the E6 are several small places, each with its own petrol station. Some places also have two. Prices here go down more than in Trondheim. Especially on the weekends.
But also between the largest cities, prices differ over time.
– Stavanger has significantly lower petrol prices than in the other cities. Local competition conditions such as structure and geography also play a role here. Maybe it is easier to drive between the petrol stations in Stavanger than in Bergen. In Bergen, it is a little more cumbersome to get around. This in turn affects prices, says Foros.
2. But is it profitable for those who are constantly lower in price?
– They face the classic trade-off of getting more customers (at a lower price) or the risk of making less money on customers who would also shop for a higher price. What determines the trade-off is the degree of local competition and how price-conscious the customers are. We see that the vending machines (unattended) are lower in price, and thus they have the main focus on attracting price-conscious customers.
