Gas woes pinch independent stations - East Valley Tribune: Business

Gas woes pinch independent stations

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Posted: Thursday, August 21, 2003 9:53 pm | Updated: 2:08 pm, Thu Oct 6, 2011.

Independent gas stations have been feeling the squeeze, more so than corporate-owned service stations and retail chains, during the ongoing gas crunch.

Smaller, locally owned gas stations already are struggling to survive among an ever-increasing prevalence of corporate-owned gas-retail chains, said Luz Rubio, executive director of the Southwest Automotive Trades Alliance, which represents independent dealers.

“They’re struggling, they’re trying to be economically viable in their neighborhood, and they can’t,” she said. “They’re trying to compete with what we call hypermarkets, ‘big box’ retailers that sell at or below the cost of a dealer. They come in and take over the marketplace, and the little guys, the independents, lose a lot of business.”

These “hypermarkets” can offer lower gas prices because they have more buying power and are backed by a corporation so they don’t rely on gas sales to survive, Rubio said. Also, they attract customers through multiple service islands and mini-supermarkets, she said.

And the ongoing gas shortage just made competing with chains that much more difficult, she said.

Independents tend be more dependent on day-to-day gas sales than chains and are less able to weather a financial storm.

Dobson Ranch Mobil, on the northeast corner of Baseline and Dobson roads in Mesa, already has been having to work harder to compete in the current marketplace. The station includes a small number of service islands, a convenience store and a repair shop.

“One of the things that happened to us was, about a year and a half to two years ago, they redid our corner,” said Gerald Tomek, the station manager. “They tore up everything. Whenever there’s construction by a gas station, it’s almost like a death knell because people change their driving habits because they can’t get into your station. And gas stations really rely on the in-and-out, quick convenience type of thing. Whenever it’s a struggle, people avoid it like the plague.”

When the gas shortage hit, Dobson Ranch Mobil was besieged by panicked drivers anxious to fill their tanks.

“We ran out of gas at noon Saturday, and we didn’t get any gas until Monday about 3 p.m., and we sold that tanker load of gas in six hours,” Tomek said. “We had four streams of cars coming through our lot, and I would say they were a quarter-mile-long down each street and it never changed until we ran out of gas at 9:45 p.m.”

The station was then out of gas Tuesday and Wednesday, then reopened with gas Thursday morning, he said. While the repair shop business remained steady, the station suffered financially as the gas pumps remained closed and few customers frequented the convenience store, Tomek said.

Convenience store sales suffered even during the rush because few people were in the mood to purchase snacks and other staples, he said.

Dobson Ranch Mobil immediately faced higher gas prices from its suppliers and it is only allotted a certain amount of gas each month, Tomek said. So it had to raise prices at the pump in order to continue making a profit, while sitting dormant after the gas ran out, he said.

“When the increase comes through a privately owned station, they have to move, they can’t afford not to because if you’re a high-volume station where you sell a considerable amount of fuel a day, it adds up pretty fast,” he said. “It’s pretty much dictated by the competition down the street. But your competition could also be the same brand of gas that you sell, and that makes it difficult because their price change may not reflect what is actually needed to survive in the business.”

ExxonMobil tanker trucks this week sometimes filled their stations’ storage tanks to half-capacity to make sure everyone got a little, said Jeanne Miller, spokeswoman with ExxonMobil in Fairfax, Va. Half of the Valley’s Mobil stations are company-owned, the other half are owned by independent dealers, she said. None of the Exxon stations in the Valley is owned by the company.

“We tried to prioritize and distribute the gasoline evenly,” Miller said. “We wanted to make sure it was fair.”

The gas crunch was a double-edged sword in that, while you might be able to make some extra money in the short term, you end up losing money in the long term because you are allotted only a certain amount of gas, so sales don’t really increase, Tomek said.

In the meantime, gas volumes have slowed and for now Dobson Ranch Mobil has gas and a steady stream of customers again.

“Things should start going back to normal,” Tomek said. “But the little stations are always losing a little ground, a little volume to the bigger stations.”

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