Why the most common gas price is far from average

Just two days earlier, AAA had set the national average price of regular gasoline at $3.79 a gallon — a full 50 cents higher.

It’s a gap so big that one might wonder if the number is wrong or taken out of context. It’s not, if you take it literally: It’s not average. It’s the actual price displayed at more gas stations in the country than any other price.

The statistics come from GasBuddy, a gas price app that has become a popular commentator and data provider on gas price trends. With the price of gas a key issue in the midterm elections, it’s worth exploring how the price can vary depending on whether you enter the mean, median (half the stations charge more, half less) or the mode—the most common that The Biden administration cites.

“Neither is right or wrong,” said Patrick De Haan, head of crude oil analysis at GasBuddy, referring to different measures of typical gas prices. “The story just has different points of view,” which represent the mean, median, and mode. he added.

For the Biden administration, the most common price may simply be that it happens to be lower than the national average. In August, Politico joked that Mr. De Haan had become “Biden’s gas buddy” because of the administration’s penchant for sharing his tweets once gas prices began to fall.

GasBuddy’s data comes from its app, which displays a map to find the best local gas prices and prompts users to update prices when they change. GasBuddy also collects data from gas stations that sign up for its Business Pages, allowing them to enter their prices directly, and from users of its gas card, ultimately obtaining data for most of its more than 100,000 stations in the US.

(In 2021, GasBuddy briefly became the #1 app in the entire US App Store after a cyberattack on the Colonial Pipeline triggered panic buying of gasoline and led to many gas stations completely running out of gas. Remember that? I forgot during the pandemic in time.)

GasBuddy calculates an average that is not too different from AAA. The auto association collects its data through a partnership with the Oil Price Information Service, an energy data and analysis provider that is part of Dow Jones, the News Corp. publisher of The Wall Street Journal.

On Oct. 3, GasBuddy pegged the average at $3.78, while AAA said $3.79. Not an interesting difference. More interesting was the median reported by GasBuddy at $3.49 and the mode at $3.29.

The mode is actually more common than chance might predict. It is often available simultaneously at tens of thousands of gas stations in many regions, Mr. De Haan said. This is because prices tend to cluster around key psychological points. For example, for six consecutive weeks in March and April, the most common price was $3.99 as many stations tried to hold the line against $4.

The average, on the other hand, is not seen very often because it is skewed by ultra-high prices in one state: California. This fall, while many drivers saw gas in the low $3s, prices in California soared from $5.21 on Sept. 6 to $6.31 a gallon by Oct. 10, a jump that can be attributed to refinery shutdowns.

“When there are refinery problems in California that push prices up, it can skew the national average,” Mr. De Haan said. Because the median and mode are not affected by California’s unusually high prices, they are “a little more relevant.” he said.

California’s high prices are due in part to higher taxes, a fee on underground storage tanks, carbon offsets and cleaner burning requirements. But those factors add only about 85 cents per gallon, according to calculations by Severin Borenstein, an economics professor at the University of California, Berkeley. Gas in California costs $2 more per gallon than elsewhere.

“This latest increase, which didn’t match the increase in the rest of the country, really points to something very different in California,” said Mr. Borenstein, who called the unexplained difference “a mysterious gas surcharge.”

It is a relatively recent phenomenon. Before 2015, the difference between gas prices in California and the rest of the country could be explained by environmental regulations and taxes.

In February 2015, an explosion at a refinery in Torrance, California caused prices in the state to spike, but they never returned to normal.

As a result, the national average gas price is increasingly skewed in California. California alone raises the average by nearly 20 cents. Mr. Borenstein calculates that the most recent national average, excluding California, was $3.53, just pennies off the GasBuddy regime’s new estimate: $3.49 as of Oct. 24.

But averages matter. Californians are still Americans. When it comes to the economic toll of gas prices and inflation, California prices matter a lot: California also has toss-up races in November’s midterm elections.

In its data released Monday, GasBuddy lists the most common price at $3.49. If that number rings true, it probably says something about where you live. The most common price right now is the price you can find in much of the Northeast and Mid-Atlantic, across the Great Plains, and into the northern parts of the South.

And remember, Mr. Borenstein said, “most people don’t see any of this” discussion of gas price statistics. “They just feel it when the price changes at their station or in the neighborhood.”

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