The low down on why San Francisco gas prices aren't so low

SAN FRANCISCO (KTVU) - Despite lower gas prices this year, San Francisco drivers are facing an unusually large difference in prices at the pump, depending on where they fill up.

Like any habit, drivers have their reasons for stopping at specific stations.

At the ARCO station on Fell Street near Golden Gate Park, cars lined up to get gas at $2.89 per gallon for regular.

"I come especially to get gas... it's worth it," said Janet Greenbaum who lives in the city and says she always shops for low prices.

"Usually, I try to get it where I know it's going to be cheap," said Nicolas Chapman, a Mission District resident who says he also tends to shop around.

Other drivers say price isn't the primary factor for them, "Convenience and usually the prices are pretty similar," said Dr. Marc Hellerstein of Kensington whose tank was near empty, forcing him to stop at a station near the Bay Bridge.

Even those who normally shop around and drive extra miles to save a few cents are seeing dramatic differences in prices within the city limits.

"I mean look next door at the Shell station, it's probably 40-50 cents more expensive per gallon. We notice those kinds of things. I mean, we may have money, but we're not stupid," said Sam Lee, an Emeryville resident who works in San Francisco.

KTVU's price check found an unusually wide range of prices within city limits, from $2.89 a gallon for regular to $3.79 per gallon at a SOMA gas station.

So why such a huge spread? UC Berkeley professor Severin Borenstein says one obvious reason is location.

"Right in the downtown area, which is where you often see the high prices is much higher because the cost of land is higher," said Borenstein.

He also says San Francisco tends to have people who aren't as price conscious as less affluent areas.

Other reasons include lower prices for paying cash versus credit and the marketing claims of big brand stations.

"The branded gasoline like Chevron or Shell, they claim they have additives that will help your car. The evidence of that is mixed," Borenstein said.

But there is also another driving factor that you don't often hear about...psychology.

"When prices fall, people tend to say oh, this is great and they tend to buy from the first station even if it's not the best price," Borenstein said.

That means gas stations don't have to compete as hard for customers. When prices are on the rise, however, competition gets tougher which tends to even out the difference in prices.

"People actually do shop around. They're more worried about gas prices," Borenstein said.

So the bottom line is customers can expect these big price spreads to continue, until the price of oil changes, and then going to the cheapest place in town might once again only save shoppers pennies instead of dollars when they fill up the tank.

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