Station owners speak out against prices they say put them at a competitive disadvantage.
More than 50 Lukoil gas stations in New Jersey and Pennsylvania doubled their gas prices on Wednesday, Sept. 12, to more than $8 a gallon. The one-day price hike was meant to capture attention as they protested what they called unfair pricing practices by Lukoil North America that hurts their ability to compete with other stations in the market, Businessweek reported.
The New Jersey Gasoline, Convenience, Automotive Association and station owners noted the one-day protest aimed to raise consumer awareness about the challenges facing Lukoil dealers and getting the company to respond to dealer grievances.
The gas station owners told Businessweek that Lukoil charges them more for gasoline than other companies charge their franchisees, forcing them to pass that increase onto consumers, and resulting in much higher prices at the pump than the competition. One owner noted the price on his invoices matched the price his competitors were charging on the street.
Roger Verma, who co-owns four Lukoil stations and three Exxon stations, said he pays 18-20 cents more per gallon to buy gas from Lukoil than from Exxon. Meanwhile, Steve Hamparsumian, who owns a Lukoil in Bloomingdale, told Businessweek his gas station was acquired by Lukoil about six years ago, and since that time he has lost 50% of his business and his rent has tripled.
Lukoil charges seven cents more per gallon than other companies, according to Sal Risalvato, executive director of the gas station association. He added owners might pay even more on top of that seven cents, depending on where their station is located. He said Lukoil engages in zone pricing—varying prices based on the competition in local marketplaces.
Lukoil North America defended its pricing practices, saying they comply with state law, and accused the gas station association of encouraging “public misstatements and ill-conceived actions.” It said it does not comment on its competitors’ prices.
The sky high gas prices kept customers away from the pumps on Wednesday. Gas stations taking part in the protest handed out fliers to customers explaining the protest and their struggle to keep prices down. Banners asked customers to contact Lukoil. Only one car actually pulled into the Lukoil station around the time of the protest, Businessweek noted; its driver circled the pumps and left.
Lukoil is Russia’s second-largest oil producer. The first Lukoil-branded service stations in the U.S. opened in 2003. Today, Lukoil has more than 500 in the Northeast and Mid-Atlantic. Many of the franchisees entered into agreements with other companies that were then bought by Lukoil.