Great Question: Who Decides Gas Prices in Mid-Missouri?
COLUMBIA - We watch the price of gas go up and down, but who decides how much we pay at the pump?
In Tuesday's "Great Question" segment, we answer Richard Ballew's question: who sets the price of gas here in mid-Missouri, and how do gas stations know when to raise or lower the price?
The second question is an easy one - oil companies send their individual convenience stores a mass text message to change the price.
But the first question is a bit more complicated...
We start with today's price in Columbia: $3.29 per gallon.
We asked a handful of Columbia drivers if they have any idea who sets the price at the pump.
"No, I have no clue. No clue...zero. A big corporation?"
Oil is a commodity just like cotton, wheat or sugar. It's bought, sold, and traded on a daily basis.
It fluctuates a penny or two each day - sometimes even 10-15 cents per gallon each day.
Sure, the local oil companies make the final decision, but that price is pre-determined at the New York Stock Exchange.
"Oh right, Wall Street. Good stuff...I can see that."
The oil companies told KOMU the bigger the city, the bigger the price gap.
In Kansas City, St. Louis and Springfield, the price might vary from one side of town to the other.
Columbia and Jefferson City aren't big enough; drivers here could and will drive from one side of town to the other to save just a nickel per gallon.
The price in Columbia might be different form the price in Jefferson City, but the prices within those respective cities are about the same.
Small oil companies in the US rely on drivers buying candy, chips, soda, and other gas station amenities.
That's why the traditional gas station, which can't survive in today's market, has become a convenience store.
Richard, thanks for the great question.