Is no competition to blame for Jefferson City's high gas prices?
Fri, 12 Aug 2011 01:11:26 GMT — The KRCG newsroom was busy Thursday with phone calls and emails asking us to dig deeper into why Jefferson City residents pay more for gasoline than motorists in Columbia. What got people fired up was this statement on Wednesday from the president of Jefferson City Oil Company, who blamed the higher prices on a lack of competition. He said quote: "Jefferson City is just kind of a mix of independent dealers, whereas, in Columbia, you have major players like Break Time and QuikTrip." KRCG's Meghan Lane dug deeper to find out of that explanation holds, in Thursday TMs Fact Finder Report. After learning that Jefferson City Oil company believes quick trip is the reason for cheaper gas in Columbia, I decided to test that analysis. We first talked to Tom May, the spokesperson for MFA Oil, which owns Break Time convenience stores in Jefferson City and Columbia. He would not go on camera. But during a telephone conversation, he told us quick-trip does in fact dictate the price of gas in Columbia. He insisted there is no price fixing in Jefferson City. He emphasized that it is a free market and fuel consumers can go anywhere to buy their gas. So, is there really a lack of competition in the Jefferson City market? I then talked to one of the newest players in town: Hy-Vee, which sells groc eries and gas. We asked the manager of Hy-Vee's gas station why Jefferson City's prices are higher. He said it could be because of where stations buy their gas. But he acknowledged the fact that everyone follows a price leader. "Everybody moves together, as the market fluctuates, what happens is the gas prices will go up or down and it will just level off, it just depends on where the first movement is and everyone seems to follow suit up or down," Hy-Vee manager of perishables Aaron Garms said. I then contacted quick trip to find out if it really dictates gas prices in Columbia. Quick trip's spokesperson first off all disputed Jefferson City Oil Company's claim that QuickTrip supplies its own fuel. "We are strictly a marketer of gasoline, of motor fuels, director of QuickTrip store operations Tim Heuback said. We don't refine gasoline, we don't own pipelines, we don't transport it even. We don't own our own trucks. We simply buy it on the market and sell it at retail. We buy it at cost and sell it at retail just like a grocer would anything else they have inside their store." The spokesperson did admit they are a high-volume retailer and that they design their stores to move a lot of gasoline. We're a market leader, Heuback said. We're going to be extremely aggressive with making sure that we market our product to the customer. QuickTrip also said it doesn't rely on gas to make its money, its convenience stores keep them alive. "gasoline is part of our business, and it's obviously a big part of our business but you have to have other things to supplement that if you're going to be in this particular business, Heuback said. I asked quick trip if they plan to open a gas station in Jefferson City, the spokesperson said while they have no immediate plans they are always open to the possibility. As of Thursday night, the typical ten cent difference holds. Columbia gas stations were selling gas at $3.19 a gallon. In Jefferson City, it was $3.29 although Hy-Vee will give you a six cent a gallon discount with a grocery receipt.