Customers' criticism angers service station owners

October 17, 1990|By Kim Clark | Kim Clark,Sun Staff Correspondent

BOWIE -- When drivers peer at the prices on the gasoline pumps at the Pleasant Hill Sunoco station on Reisterstown Road, they get angry. Now station owner Rick Caudill says he is getting angry back.

"The first word out of their mouth is, 'Jesus,' and it doesn't stop," Mr. Caudill said of his customers' responses to the ever-increasing price of fuel. "They say, 'You must be making a fortune.' "

If he gets into an argument, Mr. Caudill said, he shows customers his delivery invoice showing that he is losing money on his gasoline sales.

Yesterday, Mr. Caudill joined about 100 other Maryland service station owners to rally against what they say is customers' unfair criticism of dealers for the 30-cent-a-gallon rise in gasoline prices since Iraq invaded Kuwait in August.

"Every day, dealers are accused of being part of the 'gouging system,' " said Chuck Warns, a vice president of the Greater Washington-Maryland Service Station and Automotive Repair Association.

Mr. Warns told the crowd gathered at a field next to Route 3 that he didn't know whether there was a conspiracy to raise gasoline prices and gouge customers. "But we're not part of it," he said.

"In a few months, when I go to buy tires for my car or childrens' toys for Christmas, I'll be angry about the price increases too," he said. "We can't say consumers shouldn't be angry. But they shouldn't be angry at us."

Roy Littlefield, executive director of the association, said industry surveys show that Maryland dealers are actually losing HTC money on their sales of regular unleaded gasoline.

Before the crisis, area dealers made about 5 cents on every gallon of regular unleaded they sold and nearly 12 cents on every gallon of premium, Mr. Littlefield said.

By the end of August, dealers were losing on average a little more than a penny on every gallon of regular and making only 4.65 cents on every gallon of premium, he said.

John Schmitz, co-owner of a Shell station in Randallstown, said dealers are getting caught in a squeeze: Drivers are buying less gasoline, and they are buying the cheaper grades, which have very low profit margins.

Gasoline sales at his station are down about 15 percent from last year, he said.

And the few customers he has are shying away from the expensive and high-profit grades in favor of low-profit economy grades.

Some dealers say they can't take the losses any longer.

Tom DeSanctis said he is living proof that gasoline dealers shouldn't be blamed for the high pump prices. He opened an independent Citgo station in June, nearly lost his shirt and is surrendering the business today.

But Mr. DeSanctis, who said he lost about $15,000 in the four months he ran the Citgo station in Brooklyn Park, said he opened the station because he had run a Shell station for three years and had seen his sales drop by about 15 percent when an independent station opened nearby and undercut his prices.

"I could not compete. Their prices were 8 to 12 cents lower than mine," he said.

0$ So, when he had a chance to open

independent station this summer, he jumped at the chance to play both sides of the industry. Then Iraq invaded Kuwait, and the independents saw their prices soar.

Oil industry experts contacted yesterday confirmed that dealers haven't reaped windfalls the way they did during the oil shortages of the 1970s. This time, they said, it is the oil producers who are gathering the profits.

"Look at Saudi Arabia, Mexico," said John Shaughnessy, who follows the industry for Argus Research Corp., an investment company in New York.

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