Why Prices Are So High At One D.C. Gas Station

There's a service station near Georgetown in Washington, D.C., where regular gas has been selling at a whopping $4.99 a gallon. You might expect to pay more in a posh part of town — and especially on a street right next to a highway. But here's the strange thing: There's another service station on the same street where gas sells for about 80 cents less.

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ROBERT SIEGEL, host:

It's not unusual for gas prices to vary from neighborhood to neighborhood, but in one neighborhood here in Washington D.C., there are two gas stations right across the street from each other, and their prices are nearly a dollar apart.

NPR's Zoe Chace tries to explain why.

ZOE CHACE: I called up UC Berkeley's Severin Borenstein - basically, the Encyclopedia Brown of gas pricing. I put it to him.

In Washington, there's a gas station, and gas is 4.99 a gallon. And directly across the street is a Sunoco, and gas is 4.15 a gallon.

Dr. SEVERIN BORENSTEIN (Director, UC Energy Institute, University of California): Where - is this down at the bottom of Rock Creek Parkway?

CHACE: Yup.

(Soundbite of moving vehicles)

Mr. JOHN BUCK(ph): Came around the corner and said I needed a close-by bathroom, and I knew they had one.

(Soundbite of laughter)

Mr. BUCK: Wasn't paying any attention to price.

CHACE: John Buck and his wife came down the parkway in their Prius, saw the sign and made a right. That's one way they can get you. The 4.99 Exxon sign is the only one you can see coming down the strip. That's how they got Sharon Scott(ph).

Ms. SHARON SCOTT: If I had noticed the lower price across the street, I would have went, definitely been there.

Dr. BORENSTEIN: Oh, it's across the street.

CHACE: Encyclopedia Brown says that changes everything.

Dr. BORENSTEIN: So it's actually, if I remember that intersection correctly, not easy to get from one to the other at all.

CHACE: You can't compare the two because trading down is inconvenient, but that doesn't explain the $5 gasoline.

Ms. SCOTT: It's ridiculous. What do they expect people to do? Just live to buy gas, I guess.

(Soundbite of laughter)

CHACE: Actually, they may not want you to buy gas at all, says Severin Borenstein.

Dr. BORENSTEIN: It's pretty much the Exxon station saying we're not that interested in selling gasoline.

CHACE: The Exxon station, unlike the Sunoco across the street, is an auto repair shop.

Dr. BORENSTEIN: And at those sorts of stations, you do tend to see higher prices. It's not their main line of business. They're willing to sell gasoline. They have a pump, and they have tanks, but they - it's not where they're primarily focused.

CHACE: The person who knows for sure why the price is so high here isn't talking. That's the owner of the station. I called his wife. I called Exxon. I called the gasoline distributor. Everyone passed the buck to the owner. He wouldn't take my call.

Here's the thing. The $5 Exxon is a beautiful site. The gas station itself looks like a thatched cottage made out of old stone. It's built right into the old Watergate Hotel, one of the weirdest looking and most notorious spots in Washington. The gas station itself is named the Watergate Exxon.

Do you think that it has anything to do with that it has the Watergate name?

Mr. WALLACE POPE(ph) (Doorman): Exactly. No question about it. I've been working here for 40 years, so I know.

CHACE: Wallace Pope is the doorman at the Watergate Apartments. He says the Watergate Exxon has always been exorbitant, at least since the Watergate scandal in the '70s. And the gas station across the street has always been reasonable.

Mr. POPE: And why? But basically because of the Watergate.

CHACE: Do you think if they change the name they couldn't keep the price so high?

(Soundbite of laughter)

Mr. POPE: I doubt it.

(Soundbite of laughter)

Mr. POPE: I doubt it. I doubt it.

CHACE: In conclusion, if you don't want to pay $5 for gas, don't; they probably don't want you there anyway. But if you want Watergate gas instead of the gas you usually put in your car, fill it up and pay for the privilege.

Zoe Chace, NPR News.

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