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The New York Times: Only Downtrend at Pump: Independent Stations

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ENDANGERED Bill Hands’s Orient station, one of a vanishing breed.
 
By STEWART AIN
Published: December 2, 2007

WHEN Bill Hands bought an unbranded gasoline station in Orient on the North Fork 21 years ago, it had three pumps — one for regular, one for premium and one for diesel. It still does.

Mr. Hands’s three-pump station, called the Orient Service Center, on Main Road, is a rarity on Long Island, according to Charles A. Gardner, director of the Suffolk County Office of Consumer Affairs. Long Island has lost at least 45 percent of its gasoline stations in the last quarter-century, and many of those that have disappeared were small independent stations.

“You don’t see those at all anymore,” Mr. Gardner said. “They’re not cost-effective.”

While the number of stations has plummeted, the amount of gasoline sold has increased — from pumps that can dispense up to five grades of gasoline.

Many factors have cut into profits and driven stations out of business, owners and industry officials say: new environmental laws, some of which require costly equipment upgrades; the soaring cost of oil; the cost of credit-card sales; and the consolidation of major oil companies.

“There are not many small mom and pop businessmen like ourselves who can make it anymore,” said Andy Harris, who bought Turnpike Service in Jericho 22 years ago. “I made more money 20 years ago on an oil change than I make today because the price of oil is so high. And the cost of insurance and workmen’s compensation has hit the sky. Put it all together and you are making less and working harder today to make the same kind of money.”

Mr. Hands, a major-league pitcher in the 1960s and ’70s, said the big gasoline price increases had harmed small stations, too. “Our profit margin stinks ever since the price went out of whack,” he said. “Most of the guys make more on a candy bar than a tank of gas.”

Kathryn Odessa, executive director of the Long Island Gasoline Retailers Association, said that because it had become so expensive to do business, “most of our guys look for a way to bring in business with a convenience store or a car wash.”

“We have between 800 and 1,000 members, and 20 years ago we probably had double that,” she said. “Every month we see several stations that are forced to close down.”

Yet plenty of gas is being sold on Long Island — 1.197 billion gallons in 2005, up from 1.106 billion in 2000, according to the New York State Energy Research and Development Authority. That is about an 8 percent increase.

Today’s pumps dispense many different grades of gasoline, some as many as five, and each has its own meter on the pump, Mr. Gardner said. He said the most at any one station is 45 meters; Suffolk has a total of 9,967 meters, up from 8,612 in 1986.

But although the number of meters has increased, he said, the number of gas stations in Suffolk has dropped from 945 in 1986 to about 580 today. In Nassau County, 550 stations are operating today, compared with 1,130 30 years ago, said Glenn F. Powell, assistant director of weights and measures in the Office of Consumer Affairs.

New environmental laws have had an effect, said Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops.

Among the subjects of these laws are the disposal of used oil and batteries and the type of underground gas tanks that may be used. Over the years, steel tanks were ordered replaced with fiberglass tanks. By 2010, the law will require double-walled fiberglass tanks.

“As a result, smaller stations are closed and sold because they are not worth putting in the new tanks and upgrading the station,” Mr. Bombardiere said. “They say there are 1,000 tanks in each county that have to be changed, and it costs about $100,000 per location.”

Mr. Bombardiere said that environmental issues and economics had combined to force stations to pump more gas than in the past to remain profitable.

“Years ago, 50,000 gallons a month was O.K.,” he said. “Now 100,000 is not good enough. What they have done is added pumps to stations, and each station has to pump 150,000 to 300,000 a month.”

Mr. Bombardiere said gas stations had turned to “alternate profit centers,” like convenience stores, because the profit margin on gasoline is so low. “The margins are not more than 15 cents a gallon,” he said.

Because 60 percent of customers use credit cards, which cost retailers 9 cents for every $3 gallon of gasoline, the profit margin falls to 6 cents on those sales, Mr. Bombardiere said. Factoring in cash sales, the profit margin averages out to about 10 cents a gallon, he said.

Mr. Powell, of the Nassau Office of Consumer Affairs, said consolidation in the industry has had an impact, too.

“After Texaco and Chevron merged, Texaco and Shell merged their distribution network and Texaco pulled out of the market,” he said. Shell has also closed a lot of stations, he said.

Major oil companies also own many of the tanks on Long Island and often the land on which the gas station sits.

Mitchell Macy, the owner of DJM Service Station in Deer Park, said that he had been renting his station from Mobil for the last 21 years and that Mobil was scheduled to replace the tanks early next year. But he said his experience had changed since Mobil merged with Exxon in 1999.

“There was once a family feeling, a team effort, a cooperative type of thing where the company was concerned about your well-being and the rent was reasonable,” Mr. Macy said. “Since the merger there has been a different mentality. The rent has tripled, from $4,000 a month to $12,000. They figure the property is worth X number of dollars and they want a return on their investment.”

Mr. Macy said Mobil declined his offer to buy his station and refused to allow him to put in a convenience store. (Beth Snyder, an ExxonMobil spokeswoman, said only, “Any business development discussions we would have with him are between him and the company.”)

As a result, Mr. Macy said, he is selling cigarettes, candy, soft drinks and lottery tickets from the small area near the register.

“When I first came into this business, I was making a nice living,” he said. “Now there is just enough to subsist on.”

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