How high can they go? That’s the question on residents minds as they faced astronomical gas price signs this morning in New Jersey and Pennsylvania states.
But, they need not worry about paying those prices. They are for show only, meant to make a point to customers about the dire situation franchise owners of Lukoil face.
57 franchise owners in these states have posted gas prices of nearly $10 a gallon to protest the wholesale prices charged to them for gas—which they are forced to pass onto customers—by Lukoil North America.
The situation is critical, the franchise owners say.
“We are doing this because we are dying,” said Khaled Kezbari, owner of three Lukoil gas stations in New Jersey. “Lukoil is charging us costs higher than the retail market. How can you compete? You cannot compete in the market like that.”
The prices will be posted for 24 hours as part of the protest.
Says Kezbari, “We are trying to send a message to Lukoil so they know what our feelings are.”
Kezbari has seen his business cut in half by the soaring oil prices, from 6,000 pumps a day down to 3,000. He’s charging customers $3.79 a gallon for regular gas, which is the average price in New Jersey according to GasBuddy.com. Many franchise owners are also offering discounts to customers who pay cash, in order to avoid the $.03 cent charge on credit card payments.
In addition to the taxes, fees, rent, and labor costs associated with owning a Lukoil franchise, Lukoil has allegedly tacked on real estate taxes and building up-keep costs, to make a further profit.
What does Lukoil have to say for themselves? A spokesman for Lukoil North America provided a statement to ABC News, saying the company values “our network of independent dealers.”
We deeply regret that the NJGCA, a trade lobbyist, has apparently encouraged public mis-statements and ill-conceived actions which harm consumers, rather than engage in constructive dialogue. The NJGCA’s efforts appear aimed at zone pricing, a commercially reasonable practice used by gasoline marketers for many years, which is fully compliant with New Jersey statutes governing the sale of motor fuel.
These so-called “reasonable” zone prices occur when gasoline suppliers use a zip code or other location factor to charge a station more or less. For example, a gas station located right off a freeway exit may be charged more, simply because of the extra customers it receives thanks to a highly populated location.
Most of the gas owners regular customers are supporting their efforts and plan to call into Lukoil with complaints. And, franchise owners are open to discussions with Lukoil. We’ll just see how the gasoline giant retaliates to the bad PR they receive.