Oklahomans Are Celebrating Lower Gas Prices

It seems the trend for some today is celebrating the lowest gas price we've seen in a while, and Lawton is curiously still the most affordable places to fill up in Oklahoma.

We've talked in the past about how weird it is that Lawton always seems to have some of the lowest fuel costs in the state given how far we are from the places that actually sell it. This means that the fuel we buy at the stations scattered across town first has to make its way to us down the highway from the places that actually sell it. How is it always cheaper than anywhere else?

Let me paint you a picture for example. I grew up in an oil industry family that moved around quite a bit as I grew up. Anywhere we lived, there was a refinery nearby where dad worked. As I grew up and moved away, I couldn't help but notice a weird phenomenon that occurs in refinery towns... Gasoline and diesel are almost always higher in refinery towns vs towns that don't have nearby refineries.

That's a weird thought, isn't it? How can a town where the fuel travels the least by tanker have higher prices than a town that has to truck it all in from great distances? All the same, you don't need a refinery in place to purchase wholesale gasoline and diesel, you only need what they call a "rack."

A rack is a place where tanker trucks pick up a refinery's finished products. Gasoline, diesel, ethanol, jet fuel, propane, etc... The truck pulls up, they specify what they want plus the brand, the truck rack workers blend in the specific brands' additives/solvents, then they drive that fuel to the gas station to be sold to the public.

Logic would dictate that the further you have to drive that fuel, the more expensive it would be to the end-user, but it's completely opposite for some weird reason.

I ended up calling someone in the local fuel industry to ask a few questions about this, but I got the feeling they didn't really want to be on record. Since I'm not a journalist I don't feel the need to disclose sources that would likely only add to the debates and arguments most people can't help but antagonize, so I'll keep the details brief. Lawton gets most, if not all of its gasoline from a few different racks across Oklahoma with a lesser-used option to purchase fuels out of Northern Texas.

Naturally, there's a sizable truck rack at the refinery over in Wynnewood, but truck racks don't exclusively exist at refineries. Our national network of pipelines can put finished products closer to areas lacking a nearby refinery. In this case, there are a few fuel racks located in Oklahoma City. The more racks you have, the more competitive the wholesale price. The lower the price at the rack, the lower the price at the pump.

This mix of competitors could be the reason that even though fuel wholesalers have to make a 150-mile round trip to deliver gasoline and diesel to Lawton, fuel remains some of the most affordable in the state down here.

Am I saying that as a fact? Not at all. I make fart jokes on the radio, I am in no position to speak factually on the topic beyond my own personal logic... and this thought is logical, I can explain better with an example.

As I said, my longest-serving hometown growing up was a small little refinery community in Northern Oklahoma. My guess is the gas and diesel there are more expensive there because they really don't have a competing products rack for +/-100 miles whereas OKC has five.

Refineries enjoy a lower carbon tax rate when they produce ethanol fuels, but Ponca City isn't an ethanol-loving town. It's always been a 100% gasoline community since it is, in fact, the superior and more efficient fuel in most vehicles... but that means the refinery sacrifices a negligible amount of profits to keep producing that pure gasoline.

A few years ago the local refinery decided they were going to ignore demand and only produce ethanol-blended fuel, forcing their hand on every retailer and gas station in town.

It did not go as planned.

The various gas stations across a wide swath of the area instantly stopped purchasing fuel from that refinery, instead opting to truck it in from Tulsa, Enid, and as far away as Wynnewood. It was a move that temporarily halted production at that refinery.

It was the backlash of supply and demand.

The refinery still made their money selling off the ethanol fuel downstream to someone else but immediately went back to offering the more expensive 100% gas. That refinery is currently on track to profit $2.8 billion this year, but they're trying to boost production beyond what anyone claims is possible to get that number even higher while the getting is good.

As it stands, the state average is $4.50 per gallon. The latest average for Comanche County is $4.23, but if the Apache Casino C-Store forces a gas war with their latest price of $3.79, that average will drastically change in the near future.