Friday, June 13, 2008

Just How Bad IS The Gasoline Business?

The next time you drive by a gas station and feel the urge to shake your fist at the rising prices, just make sure you don't blame the guy at the register trying to get by by selling a few slushies and Slim Jims! We've long heard gas station owners claim they make just a few pennies a gallon off of gasoline sales. And here's proof they were telling the truth!

(CNN) -- Oil giant Exxon Mobil Corp. plans to sell its company-owned gas stations, saying they aren't profitable enough even with gasoline selling at $4 per gallon.

The 2,220 stations make up about 1/5 of the Exxon and Mobil stations in the United States.

The nation's largest oil company, which earned nearly $41 billion last year, says it will sell more than 2,000 stations over the next few years.

"The fuels marketing sector is a very challenging market," ExxonMobil spokesperson Prem Nair said, adding that the company is feeling particular pressure from hypermarkets like Wal-Mart that sell gasoline.

ExxonMobil plans to sell 820 owned and operated stations as well as 1,400 stations leased to dealers. The 2,220 stations make up about 1/5 of the Exxon and Mobil stations in the United States. The company says the stations to be sold will continue to sell ExxonMobil product.

"As the highly competitive fuels marketing business in the U.S. continues to evolve, we believe this transition is the best way for ExxonMobil to compete and grow in the future," said Ben Soraci, U.S. director of retail sales for ExxonMobil.

The states with the largest number of ExxonMobil-owned stations are California and New York, each with more than 200. ExxonMobil also has a large concentration of stations in Texas, Florida, Maryland, Tennessee and Virginia.

The interesting thing about Exxon is that they don't even particularly try to be price-competitive - at least where I live. I can think of two Exxons - one in Derwood, the other in Kensington - with gas prices that are at least 10-15 cents a gallon higher than their competitors just across the street!

Looks like the tiger in Exxon's tank is just a tabby!

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