Gas wars still raging in Md Owners, distributors fighting falling gas prices, consumption.

April 05, 1991|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

Operation Desert Storm has ended, but Maryland service station owners and independent distributors are still fighting an economic battle with falling gas prices and decreasing consumption.

"The retail situation is really horrible," says Roy Littlefield, executive director of the Maryland Service Station Dealers Association, which has 1,500 members.

Gasoline in Maryland is now considerably cheaper than it was before the war.

When Iraq invaded Kuwait in August, the average price for regular unleaded gas at self-serve stations was $1.08 a gallon.

The price for regular gas peaked in December at $1.43. According to figures released today by the American Automobile Association, the average current price is $1.06, about the same as this time last year. And that includes an additional federal gasoline tax of 5 cents a gallon that took effect Jan. 1.

Lower gasoline prices might be a welcome sight for consumers, but Littlefield said retail service station operators are eroding profit margins by lowering prices to attract customers.

"Station owners are taking a terrible beating," he said. "Most stations are not making money."

Charles Warns, who operates two Exxon service stations in White Marsh, said he isn't doing well.

"As long as people are buying less gas and stations are trying to attract people by lowering prices, profits will be deflated," Warns said, declining to offer specifics about his own situation.

The latest figures from the Motor Vehicle Fuel Tax Division of the State Comptroller's Office indicate that fuel consumption in Maryland has been declining.

In January, 182.2 million gallons of motor fuel were sold, 3.2 percent less than in January 1990. In December, motor fuel sales were down by 4.3 million gallons, or 2.1 percent, from the same period a year earlier.

Besides buying less gasoline, Littlefield said, many consumers have switched from high-grade fuel to lower grades. In most cases, dealers make more money on premium gasoline than on regular.

Littlefield also said ancillary sales, such as snack foods and car repairs, are also down.

Retailers aren't the only gasoline sellers feeling the pinch. Independent distributors, also known as jobbers, are suffering as well.

One of the first casualties was J.E. Meintzer & Sons Inc. and its subsidiary, Easton Petroleum Co. Inc., both of Easton. Both companies have filed for bankruptcy.

"They had some cash-flow shortfalls because of the current economic situation," said Paul M. Nussbaum, an attorney with the law firm of Whiteford, Taylor and Preston who is representing the firms. "The market has caused a crunch for everyone."

Meintzer, which employs 25 people, is a wholesaler and retail distributor of oil and petroleum. Easton Petroleum operates 24 gas stations in Maryland, several of which are called Big Red. Easton employs 150 people, according to Nussbaum.

The two companies filed for Chapter 11 reorganization two weeks ago. Meintzer listed its assets at $8.8 million and debts of $6.7 million. Easton has assets of $2.2 million and debts of $3.1 million.

Nussbaum said the bankruptcy petition will give the two companies "breathing space."

"Fluctuation in gas prices has caused some lessening of profit margins in the oil business as it has for everything else," he said.

Meintzer and Easton Petroleum are among a dwindling number of independent distributors who are trying to survive gasoline price wars with the major oil companies, said Bob Irvin, president of the Mid-Atlantic Petroleum Distributors Association.

In the last five years, the number of independent distributors has been declining, Irvin said. Currently, there are between 100 and 120 jobbers in Maryland.

Independent distributors, who often own or lease independent gasoline stations, buy gas on the wholesale market and sell it to stations not served directly by oil companies.

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