Tuesday, June 10, 2008

EXXON PINS ITS DEALERS TO THE MAT

Soaring costs are squeezing gas station owners too

Dealers say fuel and other expenses are rising so rapidly that they can't keep up.
By Elizabeth Douglass and Ronald D. White Los Angeles Times Staff Writers June 10, 2008 Andre van der Valk hasn't been paid in six months. He has a job, though, as owner of four service stations in Southern California. He hasn't taken a salary this year so he can pour all his money into buying fuel for his stations. Despite the jaw-dropping prices at the pump -- they jumped 19 cents a gallon in California to $4.43 in the last week and averaged more than $4 a gallon nationwide for the first time, the Energy Department said Monday -- service station owners aren't making the killing that motorists assume. That's because credit card fees, the price of tanker-loads of fuel and other costs are rising so rapidly that station owners haven't been able to keep pace despite the record prices they're charging. "People see $4 gas, and they think these retailers are making a fortune," said Ben Brockwell, a director at Oil Price Information Service, which tracks fuel prices.
"The reality is these guys are being stressed to the limit." Gas station operators say the squeeze began years ago, as oil companies siphoned off more of the profits, took a cut of in-store sales and left owners to grapple with higher rents and equipment mandates.
--read entire article--
___________________________________________________________________ EXXON, along with other retailers, has decided that the current turmoil in the retail gasoline markets is the perfect cover for a takeover of those pesky independent dealers. Why put up with individuals, when you can clean them all out, put in cheap (cheaper, cheapest) hourly employees and pocket all the profits?
(Washington Post) Sam Darab, who fled Afghanistan after the Russian invasion, has been an Exxon dealer in Fairfax for 20 years, but he says low profit margins, competition from a big Safeway gas station and rising rents charged by Exxon Mobil are driving him out of business. Darab, a father of seven, plans to close his gas station Sunday.
"I work so hard," he said. "They have been so harsh with me."
Another Exxon dealer, Sohaila Rezazadeh, who was featured on the front page of The Washington Post last month, said yesterday that she can't advance the cash Exxon wants for deliveries and hasn't had any gas for four days. She said high rent and low profit margins had drained her accounts. She plans to close her station by the middle of this month.
Exxon Mobil had no comment on either of the dealers.
And you're not likely to see a comment. You will see double-page, full-color magazine spreads with deer delicately browsing the environs of drilling environments, but nowhere in sight will be found the vanished Sohaila or the bankrupted Sam.
They are a vanishing species of their own; the independent dealer. Not even bought-out, as their investment free (but unionized) line-worker brethren have been, these entrepreneurs are merely dumped. The long decline of what were once called 'service stations,' back in the days when even a modest profit and long hours allowed them to pump your gas, wipe a windshield, check your tires or oil and wave you off with a smile, began with 'self-service.'
Remember the service station with a lube-rack? Remember when filling your tank didn't mean running the risk of over-splash ruining your clothes? Remember those halcyon days of an attendant actually raising the hood to check windshield-washer solvent or the oil level--squatting down to remove the valve-stem caps and check the pressure in that suspiciously low right rear tire?
And they dare to call what they have left us a service-economy.
Earning $41 billion last year, you can depend that by forcing out dealers such as Sam and Sohaila, EXXON will retreat further behind the bulletproof glass of Darth Vaderism, leaving us to the vagaries of self-service in its final iteration;
  • Wary of leaving our cars to pump gas
  • Left to swipe a credit-card, most probably a proprietary card
  • Putting off the checking of oil and tire pressure for daylight hours and the hoped-for comfort of someone to call the cops if we're mugged
  • Plus, an array (perhaps) of vending opportunities
And, of course, increased profits and returns to investors.
As for customers, when you allow a homegrown oil cartel that blames its pricing on foreign cartels (and gets away with it), there is a predictable result. A frightened, price-gouged, ignored and abused consumer with no option left but to pay an increasing price for a decreasing value and shut the hell up.