Turns out there are mysterious forces behind those constantly changing prices at your local gas station. Whereas in the past stations would generally update pump prices once or twice a week based on oil prices and market factors, most stations now rely on computer software to set and keep prices at the optimal level. According to a recent report in the Wall Street Journal, gas stations have joined thousands of companies now using artificial intelligence software for pricing.
This brave new world for gas stations is here to stay, according to Patrick DeHaan, analyst with GasBuddy.com. "More and more (stations) are taking advantage of technology and computer programs to input their pricing, to look at competition, and to determine what the best price may be," he says.
There are several factors that go into setting and maintaining the optimal price, right down to what day of the week it is. But like real estate, location is very important. "The average income in a zip code may affect prices," says DeHaan. "More affluent zip codes may tend to see higher prices because people there are less price-sensitive."
The new technology has definitely changed the old-school price wars between neighboring stations. "Sometimes now it's computers kind of warring against each other, all to have the most attractive price and to take advantage of the traffic that comes into stations," says DeHaan.