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In Tulsa, gas prices always below the norm

Marketplace Contributor Nov 23, 2012

In Tulsa, gas prices always below the norm

Marketplace Contributor Nov 23, 2012

On the south side of the University of Tulsa sits a QuikTrip gas station and convenience store that’s frequented by college students. Now, go a mile north, a little past the northwest corner of campus. In case you filled up, but forgot you were thirsty, pick up a 32-oz. fountain drink at another QuikTrip. Forget the taquitos? Just go half a mile east. Yet another QuikTrip has hot roller-grills a-plenty.

The thing to understand about QuikTrip, other than that it’s the biggest chain in Tulsa, which in turn has one of the highest concentrations of gas stations in the country, is that it tends not to have customers, so much as fans. Bob Roberts, who works in the Tulsa Public School system, is one of these.

“If I’m in an area where there’re QuikTrips,” he said, “I won’t buy gas anywhere else.”

“One of the things I like about it is that it is a local company,” said Raquel Phillips, another Tulsan who works in brain research. “If I’m going to be really honest, it’s that they have a great selection.”

So, how did Tulsa end up with so many gas stations?

“With relatively low cost of land in this part of the country, it’s easy for people to have quite a bit of land and live far from the population center,” said Chad Settle, an economics professor at the University of Tulsa.

He says Oklahoma is spread out, so Oklahomans drive more, which means its residents demand more gas. It’s different from a place like L.A., where people drive plenty, but land is expensive. In Oklahoma, companies can afford to build more stations. So many stations constitutes an abundance of supply. Could this be a reason behind gas prices that are regularly well below the national average?

Chuck Mai with AAA Oklahoma thinks so.

“This competition really helps keep our prices lower here in Oklahoma,” he said, “and because of that competition, we really come out the winners, the motorist does, because the prices are typically then lower than the rest of the country.”

Mai doesn’t think that is the only reason Oklahoma gas prices are so low, but Tulsa’s high number of stations does have some influence.

To confirm that theory, I turned to QuikTrip. Mike Thornbrough, a spokesman for QuikTrip, said stores do compete with rivals from other chains, but he added, “we’ve found over the years that if you concentrate on what everybody else is doing, you lose sight.”

For a third opinion, I asked Settle. He said the phenomenon of more stations meaning lower prices was “theoretically possible,” but only in a market where lack of competition was leading to higher prices. But he said in Tulsa, that’s not what’s happening.

“We don’t have a larger number of competitors. We just have a larger number of gas stations for those competitors,” he said.

According to Settle, what really lowers price in Oklahoma are things like the low state gas tax, and proximity to refineries.

“Obviously your transportation costs are going to be smaller the closer you are to refineries,” he explained, “which enables them to potentially sell to lower price to consumers.”

Still, even if all those stations sitting on cheap land don’t get drivers a lower price, they are good for dirvers as consumers. Because, let’s face it: no one likes having to travel more than three minutes to get a 32 oz. iced tea at QuikTrip. 

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