Coastal to add gas stations in Md. Company hopes to have 50 in state in 5 years

June 19, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

As major oil companies reduce the number of service stations in Maryland, Houston-based Coastal Corp. is poised to expand its retail operation in the state.

Coastal, which now has 12 Maryland stations, plans to double that number in the next year and then increase it to between 50 and 75 over the next five years as part of an overall growth plan, according to Steven C. Boyd, executive vice president of Coastal Oil of New York Inc., a Coastal subsidiary.

"We are pleasantly surprised at how well our brand is being accepted," he said, adding that the company's advertising is focusing on the "value" of its product.

How formidable a force Coastal stations will be in the Maryland market, which has nearly 2,200 gasoline stations, will depend on their volume of business, said Chuck Warns, president of the Greater Washington-Maryland Service Station and Automotive Repair Association. "Seventy-five stores with high throughput would be a factor in the market," he said.

Coastal, a diversified energy company with $10 billion in assets, plans to expand its network through gasoline distributors, also known as jobbers, who sell oil products to independent dealers, according to Coastal spokesman Steve M. Eames.

The trend by major oil companies to abandon stations that do not sell a certain minimum has been pushing more dealers into the arms of these distributors, Mr. Warns said. "It's one of the by-products of the majors ending their stores," he said.

That was the case with the newest Coastal station, the first in Baltimore. Located at East Northern Parkway and McLean Boulevard, the former Exxon station is owned by David Meadowcroft, his family and another investor.

Mr. Meadowcroft said he ended up a Coastal dealer because Exxon was unhappy with his station's sales. When Exxon offered to renew his lease at a higher price, he exercised an option to buy the station from the oil company. At a station owners' meeting in April, he made contact with Eastern Petroleum Corp., an Annapolis-based jobber that was looking for stations that wanted to switch brands. "They gave us the best deal," he said about Eastern.

Exxon spokesman Les Rogers would say only that Mr. Meadowcroft "had a choice and exercised that choice."

The move toward jobbers has been gaining momentum among the state's gasoline station network. Whereas five years about 80 percent of the stations received their products directly from oil companies, now about 68 percent are directly supplied and the rest get products through distributors.

While this may mean more brand names are on the market, it actually consolidates the business under the distributors, who provide a variety of brands, Mr. Warns said. This in turn would give the distributors more influence in the pricing of the gasoline, he said. "I don't see it as a good trend," Mr. Warns said.

However, the entry of a new brand in the Maryland market should be helpful to motorists, according to William F. Zorzi Sr., public affairs officer for the Maryland Division of American Automobile Association of Mid-Atlantic.

"The more the merrier," he said.

Eastern, which also distributes Amoco and Citgo oil products, owns or supplies gasoline to 50 stations in Maryland and Northern Virginia, according to John Hollender, marketing manager for Eastern.

Coastal's 11 other Maryland stations also are supplied by jobbers. Seven of the stations are in Anne Arundel County, two in Carroll County and one each in southern Maryland and on the Eastern Shore.

Coastal, the 46th largest company on the Fortune 500, has sold unbranded gasoline products to other oil companies since 1955. It got into the retail business in 1973 when it acquired the 231-station Derby retail chain in the Midwest, according to Mr. Eames.

In 1987 the company consolidated the Derby outlets with stations acquired the previous year in the Southeast and Texas under the Coastal name.

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