ExxonMobil to sell 2,220 gas stations

[Amerigo Vespucci]

Source: CNN

(CNN) -- Oil giant Exxon Mobil Corp. plans to sell its company-owned gas stations, saying they aren't profitable enough even with gasoline selling at $4 per gallon.

The nation's largest oil company, which earned nearly $41 billion last year, says it will sell more than 2,000 stations over the next few years.

"The fuels marketing sector is a very challenging market," ExxonMobil spokesperson Prem Nair said, adding that the company is feeling particular pressure from hypermarkets like Wal-Mart that sell gasoline.

ExxonMobil plans to sell 820 owned and operated stations as well as 1,400 stations leased to dealers. The 2,220 stations make up about 1/5 of the Exxon and Mobil stations in the United States. The company says the stations to be sold will continue to sell ExxonMobil product.

Read more: http://www.cnn.com/2008/US/06/12/exxon.mobil/index.html

[sandnsea]

1. Uh oh, nobody's going to be able to drive

There's no reason to sell them unless you don't think they're going to be used.

[bhikkhu]

18. They don't make money. That simple.

Typically the markup on gas is only 2-4%, depending on the market and location.

So a station starts with a slim margin, then bank card processing takes about 2%. In many cases, the result is that the stations lose money on gas sales, and then pick up money on grocery sale - those mini-mart markups are 30-50%. But with gas so expensive, mini-mart sales are down. So in any case gas stations are a lousy business to be in now.

If you were Exxon and making billions on your oil production, and nothing on your gas stations, and could sell off those stations painlessly for a tax-offsetting loss and ditch that whole headache, the choice would be obvious.

[mucifer]

2. I think this is a scam to try to get people to believe they are hurting

They make me sick.

[eilen]

4. No, they are getting ready for the "Pop!" goes the oil bubble

Why would a company, who is enjoying "record profits" downsize? They are making tons of cash for their investors, most other companies would be expanding. Honestly, trying to blame Walmart for it's woes is too rich considering it is retail that is hurting from the oil prices on two fronts--the storefront and the distribution. Walmart especially is being hit by high diesel prices. They will be laughing their way to the bank. They are selling high.

Did you see the latest entry on reports that there is no oil shortage (i/r/t barrels pumped)?

Hopefully this is a harbinger of lower prices to come... I wonder why now? Oh yeah, this is an election year, right?

[whosinpower]

5. This is a harbinger of something alright

Although I am skeptical of lower prices.

Less distribution - not more. Maybe trying to squeeze that last profit out of the gas - less distribution = even more demand - longer line ups at operating stations = higher prices.

Or - they are smelling depression in the air - and are cutting down now before the onslaught.

Or - the oil bubble is ripe to burst - as you have surmised before.

[happyslug]

24. Exxon main source of revenue are sipper wells, NOT retail sale of gasoline

Sipper wells are wells that produce 1-2 barrel a week or a month. These wells are very profitable, but only are pumped once a week or once or a month (And sometimes once a year). The wells were drilled decades ago, the pumps installed shortly afterward (i.e also decades old). These wells peaked out decades ago, but are still producing some oil. Not enough oil to pump at once, but enough oil to re-start the pump once a month, pump the oil that has flowed to the pump and then stop pumping till it is believed enough new oil has drained to the pump.

These sipper wells are what is Exxon's profit is built on, on an accounting basis these wells were paid for decades ago, when they were producing a lot more oil then today. On papers they are almost no cost to operate these wells given that all you have to do is start the pump (and do minimum maintenance on that pump). You pump the oil into a tanker and then stop that pump and move to the next pump. When the Tanker is full you haul down to the refinery to be refined. Almost all pure profit (especially at $4 a gallon gasoline).

My point is the Exxon profit is NOT a product of its Refining Oil or even selling oil, it is have control over a huge number of these older now low oil producing wells. Thus we could Tax these profits at 100% and it will have no affect on what Exxon is doing in other areas, but would transfer the rapid increase value of the oil from these old wells from Exxon to the US as a whole.

[Bob Dobbs]

3. They need to sell them before The People start burning them down.

exxon=Enemies of The People.

[ohio2007]

8. The gas pumps will be empty. No way to burn em down

[geckosfeet]

6. Right. After record profits year after year we decide to get out of the business.

Something stinks.

[Hawkeye-X]

7. Uh - I know where all the money Exxon's losing....

Exxon should get all of this fatso's money back.

[Whoa_Nelly]

9. You'd think since he's rich, he'd do something about those teeth!

He's a fucker...no doubt about it.

Why bother with teeth reconstruction when you can just eat the world for dessert?

[whistle]

10. Dumping super cleanup responsibilities from leaky underground tanks

[XemaSab]

14. That's probably half of it

It all boils down to LUST. ;)

[defendandprotect]

16. That's right also; those cleanups are still going on . . .

and they've been doing it for 15 years/? --- is that an over-estimation?

[sellitman]

11. I stopped buying their gas after Valdez.

Guess I single handedly drove them out of business?


:wow:

[defendandprotect]

17. Me, too ---

[CountAllVotes]

21. me three ..

_ers!!! A pox on them for their evil!! :evilfrown:

:kick:

[Skink]

12. Did Enron try this

Btw I got gas for the same price as two days ago today.

[thesquanderer]

13. People seem confused

Contrary to some of the other messages left... They are looking to sell (not close) stations, and I wouldn't even really call it downsizing in the typical use of the word. This is keeping the insanely profitable part of the business--everything UP TO where the fuel gets to the gas pump, all the areas where profits are huge and there are few competitors (only a handful of oil companies)--and then getting out of that last part, the actual gas station business, where the remaining profit potential is relatively small and competition is fierce. They will gladly leave that to the mom-and-pop operators and such who are willing to buy their fuel from ExxonMobil at high prices and try to make a few cents a gallon for themselves, often while trying to undercut the guy across the street.

[Alcibiades]

15. Ding ding ding

I was about to say this, but then I scrolled down and read this.

They could take the profits from this and expand their capacity--naaah!

[bhikkhu]

19. Don't forget the likely "charge against profit"

I am guessing the station's book values are high and the whole deal will let them offset a bundle of otherwise taxable profits.

[uppityperson]

20. Our local Jackpot was Exxon, now is someone else

[Imagevision]

22. ExxonMobil will sell 2,220 gas stations and still record- record profits, you'll have to get

use to waiting in long lines again but like Exxon/Mobil really gives a sh*t!!!

[Dark]

23. Smart. They know gas is going out of fashion. n/t