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San Francisco Chronicle: Dealer prices gas over $4 in protest: He says tactics used by Shell are unfair to operators

C.W. Nevius

Thursday, May 10, 2007

It has become almost a regular stop for San Francisco tourists. Once they’ve seen the Golden Gate Bridge and the Transamerica Pyramid, they can drive down Harrison Street to see the most amazing sight of all.

Regular gas for $4 a gallon.

Actually, it is higher than that. At Bob Oyster’s Shell station at Sixth and Harrison, regular is $4.33 a gallon, plus is $4.43, and “V-Power” is $4.53. Motorists can be seen rolling their eyes as they drive by. Just another example of a greedy station owner, sticking his customers for all they are worth?

Not really.

There’s a much deeper story here, and it begins with Oyster, a respected, self-made businessman who turned a single station into Oyster Petroleum, a profitable firm in Redwood City. Oyster is nobody’s fool. Don’t think he isn’t well aware that the Chevron station across the street is selling regular for 70 cents less.

Putting the price way up over $4 a gallon isn’t about making a profit. It’s about making a statement to a multinational corporation. After Shell forced him to pay higher prices for gas in San Francisco and jacked up his rent, Oyster says, he decided to fight back.

“I got fed up,” Oyster admits. “It makes a statement, and I guess when people see that price they also see the Shell sign right next to it.”

In fact, far from making a huge profit, Oyster is going out of business. He has operated the Shell station at Sixth and Harrison for 22 years, but he’s walking away from it at the end of the month, handing over the keys to Shell officials and expecting them to shut it down.

“I’m getting nothing for the station,” he says. “I just give them the keys and walk away. They told me they were probably just going to fence it and bulldoze it anyway.”

For franchise dealers like Oyster, it is the ultimate irony. At a time when the oil companies are posting record profits, the little guys are struggling to stay in business. And many, like Oyster, are giving up the fight.

“The dealer can no longer be competitive,” says Dennis DeCota, executive director of the California Service Station and Automotive Repair Association. “The companies are squeezing these guys out. Bob’s tired of it, and a lot of us are. It’s just wrong.”

Shell, of course, says nothing could be further from the truth. “I can only speak for Shell, but the majority of our sites are independently owned,” says company spokeswoman Karyn Leonardi-Cattolica. In fact, she says, the number of independents is increasing.

Maybe so, but anyone entering the business had better be prepared. Oyster says his rent has gone up exponentially. Fifteen years ago it was $1,000 a month. Then it went to $6,000, then $8,000, and five years ago the company wanted $13,000. Oyster says he was able to appeal that amount, based on real estate values, and “we got it down to $6,000,” but this year Shell came back with a demand of $13,000 again.

Leonardi-Cattolica did not get back to us Wednesday about Oyster’s station, but when asked in the past about similar rent increases, she said, “To the extent that rents went up, it was to bring them in line with the rest of the market.”

DeCota and Oyster see a more sinister motive: If the dealers like them leave, a company like Shell can run its stations with its own employees and set its own pump prices.

“That way they really are controlling it from the well head to the gas pump,” says DeCota. “Once the gas companies get control, you are going to pay the price.”

It isn’t just the rents that put the squeeze on the independents. Oyster has other stations in the Bay Area where he can buy gas for up to 20 cents a gallon less than what he has to pay Shell for gas in San Francisco.

“We’ve said, ‘Just let me buy my gas where I want to,’ ” Oyster says. “They won’t let me do that. I want to say, ‘You guys make enough off of me. ‘Why don’t you give me a little break?’ They don’t care. Shell would rather put us out of business.”

That’s a job that has been pretty well accomplished. Despite a location that is just off the entrance ramp to Highway 101, Oyster’s station isn’t getting much traffic. Part of that is the price, of course.

I stood on the curb for a full 20 minutes Wednesday afternoon before the station had a single customer. And that was motorcyclist Ken McNary, who said he stops by only because he thinks his Yamaha needs “V-Power” gas. But when I asked him if he’d noticed that the Chevron had much lower prices, Oyster’s station lost another customer.

“Well, I’m going across the street from now on,” he said. “The last time we filled up our van here it cost $120.”

While the price per gallon gets all the attention, Oyster says the little secret of independent dealers is that, like movie theater operators, they make their profit on the extras — snacks, drinks and other items. But with the automated pumps and a small lot, he’s limited to three gas pumps and a tiny cashier kiosk.

“All I’ve got is gas and cigarettes,” he says. “And you can’t sell that many cigarettes.”

So Oyster took matters to their logical conclusion. If it took $4 gas to get people’s attention, he’d give them $4 gas.

“I’m going out with a bang,” says Oyster. “And I don’t care if I don’t pump a gallon on the last day.”

C.W. Nevius’ column appears regularly. His blog, C.W., can be found at E-mail him at [email protected].

This article appeared on page A – 1 of the San Francisco Chronicle


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