ExxonMobil Exiting Retail Gas Market

[buster]

http://news.yahoo.com/s/nm/20080612/bs_nm/exxon_dc_3

Quote:
"I think the decision came that it's more of a headache than its worth," said Oppenheimer & Co analyst Fadel Gheit.

Although the company does not release profit margin figures for its retail arm, Gheit estimated the stations' margin was between 10 percent and 15 percent, about one-third its margin on crude oil production.

"The question is who is going to buy them, and how much are they going to pay for them," Gheit said.

 

[Shannow]

Interesting to see what they will reinvest in then.

I'd imaging that Petrol Stations will be seriously hard to offload at some point in the future.

 

[Gary Allan]

I pity the 50-something sales rep that managed a district. The stations are most likely going to employ the same number of people at probably the same (or close) wage level ..but their not going to need a higher paid district manager when whomever buys them already has one at (probably) lower than Exxon proper wages.

 

[Steve S]

Not profitable enough % wise.

 

[Shannow]

They were certainly profitable enough down here until the industry started taking over the independents, and driving down margins until the independents all went broke.

Yes, the profit in a petrol station is very low, having been absorbed into the upstream activities.

 

[Doug Hillary]

Hi,
some time ago I said that this was happening in OZ too

Most SStaions here are now owned by the Distributors - it all started some five or six years ago

It's a wise move in my experience

 

[Jimbo]

Even if the oil company does not operate the station, in many cases they own the land, building and equipment. The operator leases it from them. That is how is was when I worked at a Shell station in the 1970's. It look from that article like they want to sell off all of that, as well as get out of operating any of them. In today's real estate market, it may be a bad decision, driven only by profit margin metrics and not counting at the long term value of the stations. Typical US corporate thinking today.

BP still owns and operates most of the ARCO branded stations on the West Coast, so it seems to work for them. Chevron branded stations seem be mostly operated by distributors, another business model. I dont know who owns the land, however. Profits from operating stations are mostly from repairing cars (that part is dying), washing cars or selling groceries, not from selling fuel. That was even the case for us in the 1970's. We sold Shell gasoline mainly so we could lease a 3-bay repair shop.

 

[Gary Allan]

Quote:
It look from that article like they want to sell off all of that, as well as get out of operating any of them.


Mobil sold off all of their stations in this area to LukeOil, a Russian company.
Quote:
In today's real estate market, it may be a bad decision, driven only by profit margin metrics and not counting at the long term value of the stations.


There was a movement to do this in the 70's pioneered by Sun Oil. It was deemed premature, but I think it's wise in the long run.

I'd say that NOW would be the time to unload thousands of future unneeded stations. The oil companies are probably well ahead of the curve on future potential for the suitability and profitability of such outlets. There are still lots of "leftovers" from the private mom and pop stations that became economically not viable due to environmental damage and the evolutions are only going to get more challenging for profitability. I see lots of station converted into used car lots. Some in extreme high traffic areas.

 

[Tornado Red]

Originally Posted By: Jimbo
BP still owns and operates most of the ARCO branded stations on the West Coast, so it seems to work for them.

The Left loves BP, because it has signed on to the green agenda. The Left hates Exxon-Mobil, because it doesn't kiss [censored]. So XOM will lower its profile by selling off the stations. And perhaps in a few years it will move the corporate HQ to Dubai -- isn't that what Halliburton did?