Just when you think big oil companies like ExxonMobil might be content with tens of billions of yearly profits, they surprise you by grasping for pennies. This time it’s not just the driver at the pump being squeezed, but corner gas station owners and gasoline wholesalers. Exxon is running the stations out of business, and refineries are cutting out wholesalers from blending ethanol into gasoline, now that ethanol is cheaper.
Exxon is selling off its 820 company-owned stations and 1,400 stations run by independent dealers on company-owned land. It’s the end of the independent corner gas station, because Exxon will sell the stations to only to its big distributors. Translation: no more independent corner gas stations, owned by people who might complain publicly about their rapacious landlords squeezing them out of business. From the Washington Post story:
"Consumers aren’t likely to notice any outward difference in the stations, and about 9,200 other ExxonMobil stations will not be affected. Those stations are owned and operated by distributors, who deliver fuel and often own several stations.
"But it will mean the end of small independent gasoline station operators such as Sohaila Rezazadeh, who owns an Exxon franchise in Oakton but pays rent to Exxon, which owns the land. Rezazadeh, who has complained about rising rent and tight profit margins, has not been able to afford new gasoline supplies for the past week. After 12 years as an Exxon dealer, she is closing her doors today."
The sales will also likely tighten Exxon’s contracts with the distributors, making it tougher to sell to independent stations.
Shell and BP have already sold most of their so-called "direct retail" stations, and Conoco is already in the process, according to the industry newsletter Oil Express (subscription only). So much for the friendly local station owner.
Now to the wholesalers and distributors. They’ve been able to buy regular gasoline from refiners and blend in their own ethanol, reaping a nickel a gallon from federal subsidies for the clean-air additive. But all of a sudden ethanol is way cheaper than gasoline. So major oil companies and refineries, previously scornful of ethanol, are taking over the blending. Wholesalers are screaming bloody murder, and demanding help from state legislatures.
The South Carolina legislature passed a bill to require that refiners sell plain gasoline, but Governor Mark Sanford (R) vetoed it. The wholesalers’ trade association, quoted in Oil Express, blamed arm-twisting by Shell and BP.
There’s some irony here. The trade association, Petroleum Marketers Association of America, applies the same kind of arm-twisting against any government or regulatory fix for the "hot fuel" ripoff, which costs consumers up to several cents a gallon in hot weather. Bottom line: No matter who screws who higher up the tree, it’s the driver at the pump who never, ever gets a break.