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BY COLIN HICKEY
Staff Writer 09/20/2008

enlarge Staff photo by David Leaming

ENOUGH IS ENOUGH: Jim Provost outside his Albion Variety store on Thursday. Provost is frustrated after he received a delivery of gas recently and expected to pay $3.60 per gallon and opened the bill to find he was charged at $4.01 per gallon. Provost is selling his business, saying, “I’ve had enough.”

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He got a quote of $3.60 a gallon. The next day the delivery was made and a bill was left.

But the price per gallon had jumped to $4.01.

Provost was not pleased.

"This is the first time in 20 years that I've owned the store that I've seen anything to this level," Provost said. "I've never seen a hike like this."

Provost is adamant that the increase was out of line, especially since he claimed larger gas stations with affiliations with major oil companies -- a category called branded dealers -- bought their gas for 25 to 30 cents cheaper per gallon the same day.

Dan Parks, operations manager at Fabian Oil Inc., disagrees.

Fabian was the company that delivered to Albion Variety that day.

Parks said the price Fabian charged simply was a response to Hurricanes Gustav and Ike, storms that were expected to close oil refineries in some southern states for five to seven days.

That event, he said, resulted in a supply uncertainty that drove prices up.

Branded stores, because they have long-term relationships with major oil companies, felt the impact of that uncertainty to a lesser degree than independent operators like Albion Variety that rely on the spot market.

"If you're unbranded, you roll the dice," Parks said. "You are buying what is left."

Jamie Py, president of the Maine Oil Dealers Association in Brunswick, confirmed Parks' explanation.

"The spot market," he said, "reacted almost immediately to external forces."

In same cases, Py said, gas supplies get so low that unbranded, independent operators can't get deliveries.

The flip side, he said, is that branded dealers usually pay a higher per gallon price than independents, at least during times when supply levels are normal.

They pay a slight premium, typically two or three cents a gallon, for the benefit of flying the corporate flag -- be it Mobil, Citgo, Shell and so forth -- and other benefits that an affiliation with a major oil dealer provides.

"All year long," Py said, "the unbranded guys are getting the gas cheaper ... except when stuff like (a hurricane) happens and then the branded relationship means something."

And what it means, Py said, is greater assurance that gas deliveries will continue, and while the price for those deliveries is likely to be higher, the jump won't be as steep as the unbranded stations see.

Py said the end result is that survival in the retail gas industry has become far more difficult these days for small, unbranded businesses.

A typical small-station owner might have to spend $40,000 to get his tanks filled, an expenditure that taxes the financial resources of many such businesses, especially since recouping that investment can take a week or more.

"We are seeing a loss of a lot of rural stations," he said. "You may find that in a lot of rural areas, there will no longer be stations to serve the public in the future."

Provost said last Friday he initially priced his gas at $4.19 a gallon. That decision had a short shelf life.

"I changed it about three hours later," he said, "because I didn't have any customers. I ended up selling it for $3.99."

That amounted to a two cent loss per gallon. And that's not accounting for other expenses -- lights, labor and credit card processing, to name a few.

Provost said Fabian Oil on Thursday provided him with a concession on last week's gas delivery. Still, Provost remains a small, unbranded dealer who doesn't buy the new realities of the industry.

"I just don't agree that because of the threat of a hurricane coming that gasoline sitting in terminals down in Portland should go up 40 cents in a day," he said.

Colin Hickey -- 861-9205

chickey@centralmaine.com

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