Chevron Station Owners Picket to Protest Pricing

About 100 Chevron service station owners picketed the company’s regional marketing offices here Wednesday to protest pricing policies that they say are costing them thousands of dollars in losses every month.

“Chevron is reporting record profits and we’re reporting record losses,” said Marty Supple, a Chevron dealer in Norwalk who helped organize the demonstration on Beach Boulevard.

Chevron Corp., the nation’s fourth-largest oil company, reported a week ago that its fourth-quarter earnings soared to $633 million, contrasted with an $803-million loss in the year-earlier quarter. Company officials attributed the increase to a sharp temporary rise in oil prices resulting from the Persian Gulf crisis.

But dealers complain that they aren’t sharing in the wealth. Dealers said the same gulf crisis that swelled Chevron’s profits is causing price-conscious consumers to abandon Chevron stations in favor of stations with lower prices. They said Chevron’s wholesale prices are too high to enable them to compete with some other major brands.

The problem of declining sales is exacerbated by Chevron’s policy of rewarding dealers with sales incentives, dealers said. The company reduces monthly lease payments of dealers who sell a minimum quota of gasoline. But dealers said they are having trouble meeting the sales quotas.

Chevron dealers say they are facing a choice: Cut profit margins to stay competitive and maintain sales volumes or sell less gas at higher margins and forgo the lease discounts.

“I’ve been a dealer for 24 years and I’ve never been through a period like this where I am losing so much money,” said Huntington Beach service station owner Gary Kelley. Carrying a sign that depicted his Chevron station as a two-story outhouse, Kelley said he has been losing $3,000 a month.

Chevron officials counter that the purpose of the pricing system is to reward hard-working dealers. They say the rise in oil prices preceding the Gulf War was a temporary glitch.

“We’ve looked at it. It’s the first time in 10 years we’ve experienced this kind of hiccup,” said Paul Murphy, a Chevron retail sales coordinator.

To ensure fairness in the system, he said, the company examined the profitability of each of its more than 1,000 independent dealers and made rent reductions on a case-by-case basis.

But those reductions haven’t satisfied some service station owners.

“Our volume is down, our rent is higher. They gave us some relief, but it is not enough,” said Edward Oson, a Chevron dealer in Anaheim who says he has lost more than $10,000 during the past three months.

Oson, toting a sign that read “Company Rich, Dealers Broke,” said he has to charge $1.04 per gallon of regular gas to earn a profit. He said he has lost business to a nearby Arco station that charges only 91 cents a gallon, presumably because Arco gas costs less at the wholesale level.

Norwalk dealer Supple said he has tried to keep his customers by slashing his profit margin on a gallon of gas to 5 cents, down from 13 cents. When Chevron officials saw that he was maintaining his sales volume, they refused to reduce his rent, he said.