Why Gas Has Skyrocketed Past $9 Per Gallon On The East Coast
Lukoil franchises staged protest against their parent company Wednesday
The specter of $5 per gallon gas has been something that's worried transportation experts and commuters all summer. No one imagined it might be even worse.
Dozens of gas stations along the Eastern seaboard opened Wednesday advertising prices north of $8 per gallon. One station in Kinnelon, N.J. was selling gas at $9.03 per gallon and several in the greater Philadelphia area were advertising it at $9.99.
Consumers, at least for now, can rest easy. The rapid price increases weren't widespread – they were part of a protest staged by Lukoil franchises against rising costs implemented by their parent company, Lukoil North America. Approximately 57 gas stations joined the protest.
Franchisees told media outlets that the company is charging them higher-than-market prices that they, in turn, must pass along to consumers. One dealer told ABC News the practice has cost him half his business in recent months.
"We are doing this because we are dying," said Khaled Kezbari, who owns three Lukoil stations in New Jersey. "How can you compete? You cannot compete in the market like that."
He said that other costs have slowly been transferred from the parent company to the franchises in recent years, and that credit-card usage has also eroded his profit margins.
The protest was coordinated by the New Jersey Gas Convenience Automotive Association, a trade association that represents approximately 1,500 station owners in the Garden State. By state law, stations cannot change their prices more than one time per day. Prices are expected to be back at competitive levels Thursday.
In a written response to the protests, Lukoil North America, a subsidiary of Russian oil giant OAO Lukoil, said, "The NJCGA's efforts appear aimed at zone pricing, a commercially reasonable practice used by gasoline marketers for many years, which is fully compliant with New Jersey statues governing the sale of motor fuel."
Pete Bigelow is an associate editor at AOL Autos. He can be reached at firstname.lastname@example.org.
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