September 12, 2012

Gas prices hit $8 in NJ, Pa. in Lukoil protest

Katie Zezima Associated Press
 

SOUTH PLAINFIELD, N.J. (AP) — More than 50 Lukoil gas stations in New Jersey and Pennsylvania jacked up prices to more than $8 a gallon Wednesday to protest what they say are unfair pricing practices by Lukoil North America that leave them at a competitive disadvantage.

Sal Risalvato of the New Jersey Gasoline, Convenience, Automotive Association said the protest was aimed at raising consumer awareness about the challenges facing Lukoil dealers and getting Lukoil to respond to dealer grievances.

Lukoil North America issued a statement defending its pricing practices, which it said comply with state law, and accused the gas station association of encouraging “public misstatements and ill-conceived actions.”

Risalvato, who held a news conference at a station posting a price of $8.99 a gallon, said Lukoil forces franchisees to pay higher prices for their fuel than competitors. It is not uncommon for Lukoil dealers to see a competitor selling gas to the public for considerably less than what they’re paying Lukoil for their latest delivery, he said.

“We were all at a breaking point,” Risalvato said.

Lukoil is Russia’s second-largest oil producer. The first Lukoil-branded service stations in the U.S. opened in 2003 and today the company has more than 500 in the Northeast and Mid-Atlantic.

The gas station association said the high prices were meant to get the attention of customers so they know the price pressures Lukoil dealers are facing.

Gas stations taking part in the protest handed out fliers to customers explaining why they are struggling to keep down prices and put up banners asking customers to contact Lukoil.

“They essentially sell the very same gasoline to stations in close proximity of each other at different prices in order to game the market and compete with other gasoline brands,” Risalvato said. “In doing so, the price may differ by as much as 25 cents a gallon, and place one retailer and the retailer’s customers at an enormous disadvantage over another station.”

Lukoil, in its statement, defended the practice of varying prices based on the competition in local marketplaces, a tactic known as zone pricing. The company said it’s a “commercially reasonable practice” used by gasoline marketers for many years and fully compliant with state law.

But Risalvato said the dealers’ complaints go beyond that.

“No matter what the market conditions are on a particular day, Lukoil’s prices are higher than just about every retail competitor,” he said.

Taking aim at gas trade association, Lukoil said it “has apparently encouraged public misstatements and ill-conceived actions which harm consumers, rather than engage in constructive dialogue.”

Risalvato said the decision to protest began with New Jersey dealers but station owners in Pennsylvania also said they wanted to join in when they heard about the effort.

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