Gas Stations Not Always Competing to Give Best Price - NewsChannel5.com | Nashville News, Weather & Sports

NC5 Investigates: Gas Prices

Gas Stations Not Always Competing to Give Best Price

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Mike Williams, Tennessee Petroleum Council Mike Williams, Tennessee Petroleum Council
Charles Beauchamp, MTSU Professor Charles Beauchamp, MTSU Professor

Everywhere you drive, you see competing signs for the Shells, Exxons, and  BPs -- gas stations of all kinds.

But our exclusive NewsChannel 5 investigation discovered that, if you look at who owns the pumps here in the Midstate, it may be that they're not really competing to give you the best price.

In fact, they may not be competing at all.

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Click here to see a map of who controls the pumps in the greater Metro Nashville area

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Take a look at this snapshot from the third week of October:

In 2005, the average price of gas was $2.80 a gallon here in Nashville -- just four cents higher than Memphis.

Fast forward to this year -- and we are paying 25 cents more ($2.87 in Nashville, $2.62 in Memphis).

Yet even with gas prices now plummeting, most of us still don't know who's controlling the pumps.

"This particular pump is higher than some of the others that I have seen," one drivers said at a pump in Brentwood.

Tennessee's lobbyist for big oil says it's supply and demand.

"Gasoline is the most competitive market in the world," said Mike Williams with the Tennessee Petroleum Council. "There's not another market that publishes its prices out on the street in two-foot high letters."

But take a look at those numbers and, in a lot of areas, you won't see much difference.

And if you look at who owns those stations, you won't always find much of a difference either. In fact, two companies are the major players in counties where prices are the highest.

One of those: Mapco.  Owned by an Israeli company, Delek, it operates 266 stations statewide, according to information from the Tennessee Department of Agriculture. It operates almost a quarter of all stations in Davidson County.

Then, there's a company that's been gobbling up stations.

Tri-Star Energy is a joint venture of two local gas suppliers (Kimbro Oil and Parman Corp.), along with Motiva Enterprises (Shell Oil and Saudi Aramco).  It operates 110 stations statewide -- most under the Daily's name -- a quarter of all stations in Williamson County.

Giving it even more control: Tri-Star supplies gas for another 120 or so stations.

Middle Tennessee State University economist Charles Beauchamp explained that the problem is: big oil companies don't have a lot of excess gas. That leaves independents struggling to find a supply they can afford.

"As for Tri-Star buying up, they have the opportunity -- they're going to buy," Beauchamp said.

"I think you are going to steadily see independents either become affiliated with the Tri-Stars or the Exxons or whoever -- or more of them go out of business."

If you want to see what's happened to the competition, take a look around downtown Brentwood.

One Shell at the corner of Franklin Road and Old Hickory Boulevard is owned by Tri-Star.  The Shell across the street -- it's also owned by Tri-Star. The nearby Exxon is also owned by Tri-Star. And the Scot Market -- you guessed it -- Tri-Star.

A Shell station across the street is independently owned, but it still buys its gas from Tri-Star.

In fact, the only non-Tri-Star station is a Mapco, and its prices are almost always the same.

And take a look at these prices:

In the high-priced Cool Springs area, there's a Shell owned by Tri-Star -- right across from an Exxon owned by a competitor. On Sunday, gas there was $2..23 a gallon.

But at the Charlotte Pike exit off I-40, Tri-Star owns both the Shell and the Exxon. The price there was $2.45 -- 21 cents higher.

 "The consumer could be paying somewhat of a higher price because of the less competition," Beauchamp said.

The economics professor and others added that, in theory, such ownership clusters shouldn't matter much since consumers can always drive to another part of town.

"I know my mother will drive miles and miles and miles to save a nickel on a gallon of gasoline," Mike Williams said.

But some consumers said that's not how they shop.

"Whenever I start to get on empty, I just pull in," a driver in Brentwood told us.

And while the companies that own these stations are getting bigger, years ago, they got a law passed that -- critics say --effectively make gas wars illegal.

"In order to have a price war, you've got to be able to sell below cost," Beauchamp said.

Critics say that law could make it illegal for companies like Sam's, Walmart and Kroger to have gas sales.  The station owners counter that the law is so weak as to make it meaningless.

"Right now, we've got the prices coming down, but they might be coming faster if companies weren't in danger of violating the law by selling below cost," Williams said.

Tri-Star wouldn't answer questions about its prices, but they insisted in a statement to us that their prices are competitive.

Station owners say they can't control big things like the price of crude.

But as you saw, they sure can turn up the price more in some areas than others.

So what can consumers do about companies that look like they're establishing dominance in certain communities?

They can ask lawmakers and the state attorney general to investigate.

And if they really want to spite them, they can shop in areas that have got more competition.

Back to NewsChannel 5 Investigates

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