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    Marginal Relief

    Fuel margins soar to 2002 highs giving retailers some much needed relief, report finds.

    LAKEWOOD, N.J. -- Thin margins, a burgeoning credit crunch, and tough competition from big box hypermarkets thrust many gasoline retailers into a sea of red ink during the first 10 months of 2002, but a recent report from Oil Price Information Service (OPIS) shows the tide has turned.

    Marketing gasoline has been a losing proposition much of this year with profits down almost 28 percent from 2001. The savage landscape has knocked out many key players in the industry leaving many fuel and non-fuel suppliers holding the bag.

    Bankruptcies among convenience store chains peaked in early 2002, with midwestern marketer Clark Retail and southeastern chain Swifty Serve the most notable casualties. But individual operators and chains who were able to weather the storm are now being rewarded with the best month for gasoline profit margins in more than a year.

    Late November retail prices for unleaded regular vary from a low of just over $1.26 gal in Oklahoma to highs of $1.62 gal in California and just under $1.70 gal in Hawaii, according to the latest OPIS Retail Fuel Watch. The latest issue shows huge state and regional variations in the profit margins that gasoline marketers are making on fuel sales. California, for example, has the nation's second highest prices, but unleaded sales there yield a margin of about 7.2 cents per gallon, smaller than all but six other states. Lower priced states such as Oklahoma ($1.26 average) and Georgia ($1.26 average) see current gasoline margins of more than 16 cents per gallon.

    Single digit wholesale-to-retail margins for most of the last 18 months stressed many c-store operators and led major oil companies to put thousands of retail stations up for sale. Buyers have been few and far between for most of 2002, but newer more prosperous economics may provoke more investment into the retail sector, said Fred Rozell, retail pricing director for OPIS.

    OPIS tracks more than 90,000 retail prices and upwards of 30,000 wholesale prices each day across North America. Most recent company specific data shows that the Amoco brand continues to flex its muscle as the flag that fetches the highest margin versus wholesale, an average of more than 20 cents per gallon, ther report said.

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