Exxon To Exit Retail Gas Station Business

Exxon says the US retail gas station market is “too challenging” and they’ll be selling the roughly 2,220 service stations the company owns. There are 12,000 Exxon/Mobil branded stations in the United States, but about 75 percent are already owned by others.

Reuters says:

Service stations have struggled, even with soaring gasoline prices, because they have not been able to push the high cost of crude oil on to customers. According to federal data, gasoline prices are up about 31 percent over the last year.

Exxon Plans to Sell Its Gas Stations [NYT]
(Photo: whatatravisty )

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  1. B says:

    I feel so bad for Exxon not making enough money. I guess the record breaking profits aren’t high enough for them. If they’re really desperate, I recommend sub-prime mortgages.

  2. qwickone says:

    How are they not passing the price on to consumers if they have record profits?

  3. Darren W. says:

    I’m trying to come up with an excuse to buy a gas station, but I’m drawing a blank.

  4. Skankingmike says:

    OMG the Richest company in the world is not going to have actually retail gas stations!!!! WHATEVER WILL THEY DO WITH ALL THAT MONEY!!!!

    Ever wonder if some day Exxon just ups and buys a country maybe they can buy Antarctica since you know it’ll be an actual land mass without ice pretty soon. Sounds like a good investment to me.

  5. Gokuhouse says:

    Sounds about right to me, Exxon doesn’t have enough money to fight in the tough gas station market right now.

  6. weakdome says:

    I’d like to buy a station. I could live in the mini-mart for probably a good 6-10 months before I ran out of food, and just imagine being able to use your own gas for your car!

  7. GMFish says:

    qwickone: “How are they not passing the price on to consumers if they have record profits?”

    Oil companies are passing the price on to consumers. Gas stations are not and cannot. On the one side there is a cartel. On the other side there is actual competition.

  8. rmz says:

    @qwickone: Gas stations make very very little profit on retail sales of gas, no more than a penny or two per gallon. Their gas stations were NOT where they made their money.

    In any case, everyone who’s talking about record profits needs to look up what a profit margin is.

  9. Trai_Dep says:

    In other words, “Owning stations gets in the way of our completely sodomizing the independent retailers, so we better unload them so that even this small pocket of people heretofore un-screwed by Exxon can better be corn-holed.”
    (I’m kind of self-impressed with the number of references of sexual congress via the backdoor that I squeezed into that sentence!)

    I wonder if their toxic brand has anything to do with their pulling out of the retail business.

  10. Trai_Dep says:

    Oh, but wait. Since Exxon stations make such a small profit margin, especially compared to 7-11, doesn’t it mean that they’re in fact Big Oil is getting an unfair rap and are deserving of even MORE gov’t handouts?

    (Thought that I’d get that out there before the Big Oil apologists join the fray)

  11. ohiomensch says:

    A local gas retailer in our city has decided to stop selling gas (his auto repair business will remain). He said he sold $1600 worth of gas over labor day weekend. His share, $160. His visa/mc fees for the same transactions – $169.

  12. FLEB says:

    @rmz: Gas stations make very very little profit on retail sales of gas

    That fact always made me surprised that the “pay at the pump” idea took off as quickly as it did. If the only real profit comes from convenience-store sales, it’s surprising that the stores jumped so uniformly and quickly into a method that meant people could gas and go without so much as seeing sales staff or the inside of the store.

    Granted, once everyone was doing it, well… everyone was doing it, but it’s still surprising it caught on in such a rush.

  13. ARP says:

    @rmz: I understand what profit margin is. Oil companies profits and profit margins are up due to short supply. They can charge more and they can sell more because demand is not abating. That’s fine when its a luxury good or non-necessity. But when you allow collusion among oil companies, it implicates national security issues.

    You are right that stations don’t make much (if anything on gas). But in this instance, Exxon owns the supply, refining capacity, and the retail location. So, they are profiting 3X, even if the margin is small in each instance.

  14. WalrusTaco says:

    see this Exxon? I’m playing the world’s smallest violin just for you… how can you not be doing something right when you make more money than any company in the world?

  15. EBounding says:

    @ARP: “But when you allow collusion among oil companies, it implicates national security issues.”

    And where’s the evidence of this?

  16. jdmba says:

    There’s a gas station here in Los Angeles which has televisions by each gas pump, and they are currently playing a loop of “You might be upset about the prices, but did you know for each gallon of gas, this station makes 12 cents? If you charge the gas on American Express that goes down to 3 cents”.

    While I find it odd that they are doing this, this article certainly supports that claim.

  17. sisedi says:

    RECORD REVENUE DOES NOT = RECORD PROFITS! Quit mouthing off when you have no idea what you’re talking about! Companies deep in the black don’t close down their retail locations!

    Where has all the logic gone?

  18. Greeper says:

    I dont think Exxon asked anyone for sympathy. When people want private companies to subsidize their addicitons, and then call the comapnies evil when they don’t, they are going to leave the market. The addict mentality on this comment thread is pretty astonishing. (Exxon should take a loss per gallon to save us money!….Exxon should tak eprofits form one division to subsidize consumers in another division….I deserve as much cheap energy as I can consume, AND I WANT IT NOWWWWWW”

  19. mac-phisto says:

    holy shit. the boycotts are working.

    (can’t believe no one mentioned that yet)

  20. Caslonbold says:

    In Seattle and the outlying areas the gas stations charge you 35 cents fee if you use a credit or debit card.

  21. I could care less about Exxon Mobile, but what does this mean for the consumer??? Are we going to have to pay higher prices because there is less competition? lower because the other companies will have more gas?? or no difference?

    It seems like this should have some kind of effect on the gas industry.

  22. @Caslonbold:
    You shouldn’t be buying gas with a credit card anyways, what a horrible way to pay more then necessary… But I mean 35 cents in an emergency isn’t too bad.

  23. saltmine says:

    @Skankingmike: Exxon doesn’t need to buy a country. They are, in effect, already a sovereign nation of their own, with bases all over the globe.

  24. saltmine says:

    @sisedi: Um, actually they have been posting record PROFITS. NOT revenue.

    And record profits, as in, the most profit any corporation has ever made in the history of money.

  25. mmmike says:

    RECORD REVENUE DOES NOT = RECORD PROFITS! Quit mouthing off when you have no idea what you’re talking about!

    Not so fast. True, there is no money selling gas to the consumer. However, there is money in extracting and refining oil. And guess what? A single company can have separate divisions – with differing revenues, profits, and losses – to do those things.

    Here’s the basic outline: Exxon Exploration and Extraction Co (or whatever they call themselves) extracts oil at a cost of about $20/barrel, then sells it on the open market at the market rate – ~$130. Exxon Refinement Co buys oil at market rate, refines on a cost-plus basis and sells to Exxon Consumer Co. Heck, Exxon Refiners might even be able to find a way to sell it at a loss. Or, if they’re feeling kinda daft (and don’t need the tax deduction at the moment), they might take down some refining capacity for “maintenance,” hence driving up demand – and cost. (See “Enron” for examples of this behavior.)

    Whatever the final cost is gets passed on to the retailer – again, maybe Exxon but just as likely some hapless family that has to sell cigarettes and big gulps to get by. Exxon still makes out like bandits. See how that works?

  26. Shadowfire says:

    @ARP: No. Profits are up. Profit MARGINS are down. One of these things is not like the other…

  27. dotcomrade says:

    It remains to be seen is how this move will hurt the consumer. I hope Exxon isn’t thinking of selling any of their stations to the Russian-owned Lukoil Company as they did with their Mobil brand. That change eliminated hundreds of locations that formerly accepted their really cool Speed Pass device. And you just know that this recent scandal never would have happened at an Exxon O & O station:

    You can read the article here: [gothamist.com]

    On another note, Exxon’s withdrawal from the retail gas business will be welcome news to the local station owners who have had to compete with Exxon’s corporate owned stations constantly undercutting them. But on the flip side, that can only mean higher prices for the consumer OUCH!

  28. dotcomrade says:

    Is Exxon running on Empty? CNBC breaks down the cost of a gallon of gas in this video on the Exxon sell-off:

    [www.msnbc.msn.com]

    And Matt Lauer grills Rex Tillerson, the CEO of Exxon Mobil, in this video:

    For more on Mr. Rex:
    [www.exxonmobil.com]

  29. notallcompaniesareevil says:

    @sisedi:

    Companies deep in the black don’t close down their retail locations!

    Where has all the logic gone?

    Where to start. First: they aren’t closing the retail stores — they are selling them. Second: what a company does with a single branch has nothing to do with the overall enterprise. Witness: if you make a million a year but you have a broken window that makes your heating bills skyrocket, you fix it. Just because you make money on the whole doesn’t mean that you don’t take action to further increase your income.

    Here’s what’s happening: with $135 oil, XOM makes more money by drilling for oil than they do by selling gasoline, for each dollar invested. By taking the proceeds of the retail store sales and investing it upstream (or paying it out to the pension and mutual funds that own the company), they are creating more profits.

    People can bemoan profits all they like, but this is a rationale move to maximize profit by focusing on the most valuable part of their business (drilling for, and producing, oil) and limiting their exposure to the least valuable areas of the company.

  30. SayAhh says:

    How the rats are abandoning ship before a new “less oil-friendly, more consumer-friendly” administration takes office. Momma always says, “bail out BEFORE you get sued.”

    On the other hand, maybe Exxon’s been sitting on solar energy vehicle technology for 20 years, and after they sell all their soon-to-be-obsolete gas stations, they bring it to market–government-subsidized, of course.. Genius!

    All kidding aside, why spend money on stations and have to deal with maintenance, labor, cleaning bathrooms, selling maps, cigarettes and lottery tickets, possible vandalism, and even battle angry, tire-iron-wielding doctors, when you’re making a killing simply supplying the black gold?

  31. ageshin says:

    Exxon and BP, and the other oil comp. are not drilling for oil. They are not building more refineries, what they are doing is creating an illusion that oil is in short supply so they can make unheard of profits. Profits are the amount of money above and beyond the costs of production etc. Why now? Simply put it is because their friends the Bush crime family is about to leave office, and they want to make as much as they can before the chicken come home to roust. By the time Bush and company departs from office, we will be skinned and plucked clean.

  32. KarmaChameleon says:

    @Skankingmike: I think I’ve heard something like this before.

    It involved building a massive plate city fueled by raping energy from the planet, and engineering a private army of gay super soldiers (with pretteh hair) made from a alien popsicle.

    Exxon is the new Shinra.

  33. Skankingmike says:

    @KarmaChameleon: LOL FF7 reference nice.

    Sephiroth!!!!!!!!!

  34. TorrentFreak says:

    I can’t beLIEve some people. Profit margins down with total profits up.

    WHO GIVES A S***!

    The bottom line is that Exxon’s total profits are at an all time high. They are getting rid of their stations because they know they can’t rape the consumer with them. That’s the only reason. It changes nothing.

    Expect Exxon’s profits to get even higher since since they ‘cut the fat’ so to speak and will now get rid of the thing that gives them the least amount of profit.

    And to whoever was blaming Bush. Grow up and educate yourself before you babble nonsense. The ‘Bush family’ doesn’t control the prices the market does. Bush has no more control over it then we do. There are a lot of good reasons to not like the President you can at least try to make logical sense.

  35. kegtapr says:

    Maybe because hardly anyone stops at an Exxon/Mobile station and you’re an idiot if you do. They are always $.10-.15 higher then any other station in the area.

    They want to make a profit, stop gouging the prices so much at the pump.

  36. synergy says:

    So… heading towards monopoly instead of oligopolies? Who wants to bet eventually the government will want to become sole owners and instead of driving prices down, it’ll raise them?

  37. lukobe says:

    @Caslonbold: “In Seattle and the outlying areas the gas stations charge you 35 cents fee if you use a credit or debit card”? What gas stations are you going to? The only ones in this area that do so are Arco stations, and only if you use a debit card (they don’t take credit cards). FWIW I think they just raised the fee to 45 cents. All other stations may have cash prices and credit prices, but no gas station in the area I’ve ever been to charges a fee if you use your credit card.

  38. boomerang86 says:

    @ caslonbold: “In Seattle and the outlying areas the gas stations charge you 35 cents fee if you use a credit or debit card”

    That is a direct violation of their credit card merchant agreement, and they could lose their account over that!

    OTOH, they are permitted to offer a DISCOUNT FOR CASH PAYMENT. Years ago, it was the norm to see two sets of prices at the pumps. In the 1970s the Arco stations made a big deal of getting rid of their branded credit cards, saying it would lower prices for consumers.

    Today, more than half of gasoline sales are paid with credit or debit cards due to Visa and Mastercard’s aggressive marketing and rewards programs. If these customers see higher prices for credit sales nowdays, they’ll shop until they find a store that offers “cash or credit, same low price”.

  39. MeOhMy says:

    Haha…the headline should read:
    “Fuel giant to exit roadside concession stand business!”

  40. Aesteval says:

    @ARP: “But in this instance, Exxon owns the
    supply, refining capacity, and the retail location. So, they are
    profiting 3X, even if the margin is small in each instance.”

    It depends upon how the company is structured. I would hazard a
    guess that each division is responsible for their own performance so
    while the beginning ends of Exxon may be performing well, the retail
    end are in the same boat on an individual basis as all the other retail
    stations, which have difficulty pulling a profit. It’s not uncommon for
    a business to want to rid itself of “unprofitable” branches.

  41. JNorio says:

    To see what truly UNREFINED a**holes the Exxon group really is, look at http://www.gregpalast.com/exxon-suxx-mccain-duxx/.
    Here it is nineteen years later, and they still haven’t compensated anyone for the Exxon Valdez disaster, despite their promises to do so. The corporation says they’ll just hold everything up in the courts until the interested parties are dead. Nice people!
    P.S.
    I think I accidentally sent two copies of the same comments; if I did, I apologize.

  42. mrearly2 says:

    Too challenging=insufficiently profitable

    The Rockefellers want to turn the screws to us, in more efficient ways. Thanks to them, the crude oil prices are artificially inflated, and the whole economy suffers.