Think gas is expensive where you live? Some drivers in New Jersey and Pennsylvania visiting a Lukoil gas station in order to fill up their tank since yesterday have been facing prices of up to $9.99 per gallon. Luckily for those drivers, the posted price is an effort by Lukoil franchisees to protest high fuel costs passed onto them by their parent company; customers will only be paying about $3.80 per gallon at the pump. (See also: How High Have Gas Prices Risen Over the Years?)
A total of 57 Lukoil franchise owners are taking part in the protest, posting gas prices above $8 to showcase to customers the high prices that they’re paying for fuel and therefore must pass onto their customers. Combined with taxes, fees and the higher labor costs required by gas stations in New Jersey due to laws that prevent customers from pumping their own gas, Lukoil franchisees in that state have found themselves particularly hard hit.
“We are doing this because we are dying,” said Khaled Kezbari, owner of three Lukoil gas stations in New Jersey. “Lukoil is charging us costs higher than the retail market. How can you compete? You cannot compete in the market like that.”
The higher costs that Kezbari refers to are typically a result of so-called “zone pricing,” the act of gas distributors charging prices to individual gas stations that reflect market factors like an area’s median income. While thought to be contrary to fair business practices by some, zone pricing is entirely legal. A company statement from Lukoil provided to ABC news defended their use of zone pricing and condemned the false prices advertised by protesting franchises as misinformation. (See also: Charting the Dramatic Gas Price Rise of the Last Decade)
“We deeply regret that the NJGCA, a trade lobbyist, has apparently encouraged public mistatements and ill-conceived actions which harm consumers, rather than engage in constructive dialogue. The NJGCA’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 statutes governing the sale of motor fuel.”
All participating Lukoil franchises are expected to return to posting accurate pricing today and tomorrow.