Sale of 820 US gas stations may boost local distributors
ExxonMobil Corp.'s recent decision to sell the 820 service stations it owns across the country will mean more opportunities for local distributors, who are increasingly playing a bigger role in retail gasoline.
Gulf Oil LP of Newton, for example, bought the delivery contracts for more than 500 company-owned and franchised Exxon stations in 2003 after they were divested following the merger of Exxon and Mobil. Gulf, a fuel wholesaler and New England's only major locally owned gasoline brand, switched 11 stations it operates on the Massachusetts Turnpike to Gulf from Exxon. Next year, it plans to switch another 158 Exxon-branded stations in New York and New England owned by its parent, Cumberland Farms of Canton, to Gulf. Gulf supplies gasoline to another 300 Exxon stations in the region. Gulf expects about two-thirds of those stations to operate under the Gulf flag.
Gulf would be interested in ExxonMobil's company-owned stations in the region, which operate under the Mobil flag, said Gulf's chief executive, Joseph Petrowski.
"We have invested in the Gulf brand," said Petrowski, "and we want to extend it."
Gulf supplies about 2,500 stations in the Northeast, about 10 percent of the market. About 2,000 operate under Gulf flags.
Gulf is an example of how local distributors are playing a bigger role in retail gasoline operations. Oil companies have been selling off relatively low-margin retail operations for years, concentrating on more lucrative crude production. Oil's surge above $130 a barrel is accelerating that trend, Petrowski said.
Oil fell $4.75 a barrel in New York yesterday to close at $131.93.
At the same time, rising costs, such as credit card fees, and low profit margins have made it increasingly difficult for small station owners to operate independently as unbranded stations, Petrowski said. The retail industry has been consolidating for years. The number of stations licensed in Massachusetts, for example, declined to about 2,700 in 2007 from about 3,900 five years earlier, according to the state Division of Standards.
Increasingly, said Petrowski, stations can't survive on gasoline alone. They typically need complementary businesses, such as convenience stores, repair services, or quick oil-change services to supplement earnings.
"For the average consumer," said Petrowski, "there will be fewer gas stations, bigger gas stations, and local people operating other businesses tied to them."
Petrowski said Gulf is hoping to sign up more independent dealers to operate as franchises under its flag by offering support services, including financing, risk management, and convenience stores.
Petrowski said gasoline prices could retreat a bit this summer, but with the threat of hurricanes in the nation's oil-producing Gulf Coast region and Middle East tensions, it would be modest at best. At the same time, a destructive hurricane or trouble in the Middle East could send prices soaring.
Robert Gavin can be reached at rgavin@globe.com.
