St. Peter gas prices average lower than Mankato’s
One fact remains for certain: St. Peter has cheap gas at $2.54.
MANKATO, Minn. (KEYC) - Look around at the gas pumps.
According to the Minnesota Department of Commerce, a gallon of gas is 11 cents cheaper this week in Minnesota than the week before, with the new state average at $3.46.
But some retailers within the state are lowering gas prices much faster than others.
According to GasBuddy, gas prices in St. Peter are averaging $2.54. Yet, 10 miles away, in Mankato, gas prices are around $3.30.
So, why the disparity?
“Some of these ultra low prices is where these price wars have broken out,” said GasBuddy’s petroleum analyst Patrick De Haan.
De Haan theorized that a price war exists in St. Peter -- but not in Mankato -- and that could explain why St Peter has lower gas prices.
“It all really has to do with competition. Some stations are being forced to lower their prices because their competitors are going down. Some stations, not,” said De Haan.
“It could be in the realm of possibilities,” Minnesota State University, Mankato, economics professor & director of the center for economic education Michael Spencer said.
Although he cannot fully confirm or deny a price war in the market, Spencer says that investigations for price leadership -- or finding the dominant gas retailer in the market -- could provide answers for the gas price gap.
“Maybe they’re competing amongst themselves and they’re not thinking about Mankato,” said Spencer. “Or, potentially, they are trying to draw customers away from Mankato.”
One fact remains for certain: St. Peter has cheap gas.
“In economics, one of the basic things we talk about is what’s called opportunity costs. So to be honest with you, I’m not going to be driving back and forth the Saint Peter to get lower gas prices,” said Spencer. “If I factor in what’s the value of my time- I think my time is worth more than a couple of bucks.”
“Well, for the stations that are still over three dollars, expect them to lower their prices,” predicted De Haan. “But they’ll probably be doing so at a much slower rate -- simply because lowering prices too quickly will likely be bad for business.”
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