Independent stations priced out
By SHIRA SCHOENBERG
Monitor staff
--------------------------------------------------------------------------------
September 05. 2006 8:00AM
DAN HABIB / Monitor staff
When the owner of Concord Getty on North Main Street figured he could no longer make money selling gas, he pulled out the pumps and turned his attention to expanding the supply of Indian and African groceries in his convenience store. Above: Robert Fiske uses a pay phone at the store.
Dhruba Shrestha gets angry when he talks about his customers' attitudes toward gas and coffee. "They're happy to pay $2 for coffee, but they don't pay for gas," he said.
"A cup of coffee costs 35 cents to make," he said. "Gas comes from mining, refining, labor. Compared to coffee, gas price is very low, but people don't see it."
In July, Shrestha was selling 500 to 700 gallons daily - about 20 percent less than last summer. Although he kept prices competitive, his old pumps, with no prepay system, were being bypassed for the newer stations down the street.
So the owner of Concord Getty on North Main Street took the natural step - he stopped selling gas and continued selling coffee. Shrestha then began expanding the supply of Indian and African groceries in his convenience store.
Shrestha is not alone. The number of gas stations in New Hampshire is at its lowest in at least 10 years, according to an annual count by National Petroleum News. In the first quarter of 2006, the state had 800 gas stations, down 181 from last year. Experts say the decline is largely due to the challenges independent owners like Shrestha face in staying profitable.
---ADVERTISEMENT---
Some, like Shrestha, believe that consumers are buying less gas because of high prices. "On bike week and race weekend this year, it doesn't seem like they came out," said Don Weese Sr., who pumps gas at his family's service station, Complete Car Care on Eastman Street. "It's not the same as last year. We didn't see nearly as much traffic." Weese said sales had declined from last year by about 6,000 gallons a week, and he attributed that largely to price.
But an informal survey of people buying gas at Concord stations found that the majority had made few changes to their routine.
Nancy Kantar, 64, who was filling up at Cumberland Farms on North Main Street, said she tried to combine her daily errands and find the cheapest gas prices. But otherwise, she said, "I don't travel less, it hasn't made much difference."
Michael Amaral of Warner, who was buying gas at Hess, said he bought more fuel- efficient cars several years ago and hopes the high costs will drive others to act similarly. But price has not stopped his weekly fishing trips to the coast. "We're finally paying what we should be," he said.
Experts suggest that Kantar and Amaral are typical in New England. "People are driving bigger cars, driving faster, driving farther and doing more with their cars, and I don't think we've seen that pattern change measurably," said Nicholas Wallner, Concord branch manager of AAA of Northern New England. Traffic on this summer's holiday weekends increased by about 1.2 percent over last year, he said.
"For anybody planning vacation travel, the price of gas is not a deterrent," Wallner said. "There's nothing to suggest that we've seen a decrease in vacation plans by motor vehicle or in general driving patterns." He noted that nationally and globally, there has been an increase in demand for gasoline this year.
Rather, the decline in the number of gas stations may be due more to competition between indepen-
dent stations and larger chains.
Dandy Automotive in Pembroke, which sold gas for close to 60 years, shut its pumps two years ago to focus on its service station. Owner Dan Clark said that as a small station, it was impossible to compete.
"What we were making on gas, 4 or 5 cents a gallon, wasn't enough to pay people to pump it,"he said. "It cost us money every year. Big corporations are trying to keep prices down, so independent stations couldn't complete pricewise."
Peter Romano, president of the Independent Oil Marketers Association of New England, explained that refinery profits rose in the wake of Hurricane Katrina. "This year, they've used refinery profits for predatory pricing in the marketplace," he said. "They have an opportunity to use prices that run below costs and price the competition out."
Larger companies that own refineries, he said, can use profits from refineries to sell gas at prices that are lower than actual costs. Short term, this benefits consumers with lower prices at the pump. But long term, independent stations that buy their gas from wholesalers or from major companies, will no longer be able to compete.
"If the trend continues," he said, "A year from now, three years or five years from now, there will be a lot less players. There will be a couple of big old refineries running the show."
------ End of article
By SHIRA SCHOENBERG
concordmonitor.com |
