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Lukoil Gas Protest Was Kinnelon Getty Owner's Idea

Rising costs at the pump inspire retailer to send a message to gasoline supplier.

When Bob Lukach pulled into the Getty gas station on Route 23 in Wednesday afternoon, he wasn't looking for gas. He was looking for an attendant who could explain if the $9.99 per gallon price hanging on the marquee was a serious mistake.

"We wanted to know what was going on," he said.

Lukach, 42, of Wharton, was informed by the attendant that the price was not a mistake. Instead, the station had raised its prices for 24 hours in protest of gas prices set by Lukoil, Getty's supplier. During rush hour, Lukach's was one of only three cars in an hour that actually pulled in to the typically bustling gas station, and even he did not make a purchase.

Getty Owner Ameer Krass said he did not mind that he lost customers Wednesday. In fact, he was encouraged by the more than 4,000 gallons of gasoline he did not sell and more than $12,000 in lost revenue from one day of declining sales. While a business owner would normally consider this a bad day, the protest of 57 gas stations in New Jersey and Pennsylvania against Lukoil was actually his own idea.

"He approached me several months ago," said Sal Risalvato, executive director of the New Jersey Gasoline, Convenience Store and Automotive Association. "[The gas station owners] were willing to take some drastic action."

Krass said his frustration began in 2004, shortly after Lukoil bought out the local Exxon Mobil brand stations. Krass' Getty station is supplied by Lukoil, which he said has a monopoly on gas supplying for the nearby area, including two Lukoil brand stations within a close proximity of Getty on Route 23.

"Due to their competitive pricing system, over the last several years they have been pricing us out of the market," Krass said.

When the supplier charges more, the retailer has to pay more for the gas and, as a result, must charge customers more. For instance, for 500,000 gallons Krass said he typically sells in a month, he barely makes $500 profit. Since 2004, Krass said he has seen an 80 percent drop in sales because he believes customers are seeking cheaper gas elsewhere.

"As a consumer, I wouldn't go to Lukoil because the prices are simpy unfair to the consumer," he said.

Some consumers tend to agree. Heidi Rivera, 30, of Riverdale, a passenger in Lukach's car, said she never purchases gas from Lukoil stations, even though they are the closest in proximity to where she lives, because of the high costs. Wednesday's prices alarmed her.

"If they suddenly put one price at $10, it would be like the end of the world," she said.

Lukach said he thought the protest was a meaningful way to show Lukoil that the price at the pump-for both customers and retailers-is not fair.

"I think it's a real good idea because it is getting ridiculous, the price of oil and gas is ridiculous," he said. "Every time the economy is good, gas and oil [prices] go right up and it puts the brakes on it. The price of gas and oil go up and people can't afford it anymore."

Customer Peter Cook, 53, of Kinnelon, said he feels that the protest could be effective if done on a larger scale.

"I think it needs to be done not just in on area. In order to be effective, it would need to have national recognition," he said.

Cook believes that more people will begin turning to mass transit and other non-gasoline-powered transportation if gas prices continue to increase as they have. New Jersey's average gasoline price is currently $3.79 per gallon, Krass said.

Krass said he does not think it is fundamentally right that Lukoil is able to charge retailers like him such high prices.

"Why is it that a wholesaler makes more per gallon than a retailer?" he asked.

In a press release Wednesday, Risalvato said that while it was not easy for the gas station owners to sacrifice business for a day to prove their point, he feels it was worth it.

“These entrepreneurs deserve to know why their small businesses are being used as pawns. They have repeatedly stated that Lukoil’s pricing practices are anti-competitive, anti-consumer, and anti-retailer.

"It was this common complaint that compelled over 50 Lukoil dealers in New Jersey and Pennsylvania to defend their establishments and raise public awareness about what’s going on in the retail market," he said. "I know it wasn’t an easy decision, but I’m proud of them for having the wherewithal to stand up and be heard. Whether Lukoil has the resolve to respond to their plea is another matter."

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