Gas prices can seem random, but there is a method behind the ups and downs.
According to GasBuddy, Nashville gas prices haven’t been this low since late 2010. Lipscomb economics and finance professor Bill Ingram said prices have to do with simple supply and demand.
“It’s all because of the price of crude oil,” Ingram said. “A big part of the cost of a product is the cost of the material that goes in the product. The United States is producing much more crude oil, so we’re less dependent on foreign oil.”
In 2014, gas prices in Nashville spiked around April and began falling in July, which Ingram said is normal.
“In the summertime when the demand increases, it puts more pressure on the manufacturers,” Ingram said. “They may have to use some equipment that’s less efficient. Some states require them to produce a different kind of gas in the summertime because there’s more of a chance of pollution. That costs more.”
Customer demand and the price of crude oil, however, do not explain the variety of gas prices in one area. That is simply business.
“One of the driving forces of pricing in product is competition,” Ingram said. “Certain parts of town, like a few blocks from campus in Green Hills, there are just a couple gas places. But if you go in another direction, like Thompson Lane, there are more places to buy gas. So it has to do with competition as well as the demographics of the neighborhood. Someone in Brentwood, where it’s more affluent, might be willing to pay more for convenience.”
The cheapest places to fill up a tank are Hermitage or Donelson, both of which offered an average price of $2.52 per gallon this week. Central and South Nashville had the highest priced gas. The Exxon on Hillsboro Pike clocked in at the third most expensive gas this week at an average of $3.09 – over 50 cents more expensive than gas in Hermitage.
Central Nashvillians don’t have it all that bad, though. According to the AAA, Tennessee has some of the cheapest gas in the nation, second only to South Carolina.
Many people travel during the holidays, so if possible, fill up your tank well before Thanksgiving week in case gas prices rise to meet increased demand.