Exxon Mobil Corp said on Thursday it is getting out of the retail gas business in the US as sky-high crude oil prices squeeze margins.
Branded service stations may be the most public aspect of Exxon’s business, but they account for a small part of the company’s profits.
Out of the roughly 12,000 Exxon Mobil branded stations in the US, Exxon, the world’s largest publicly traded oil company, owns about 2,220.
Exxon plans to sell those service stations over several years. They include about 820 stations that it also operates.
The company will maintain the Exxon and Mobil brands, Exxon spokeswoman Prem Nair said.
Consumers will still be buying gasoline at stations that carry the Exxon and Mobil names, but they will not be owned by the company.
Service stations have struggled, even with soaring gasoline prices because they have not been able to pass along to customers their additional costs from soaring crude oil.
Federal data indicate that gasoline prices rose about 31 percent over the last year and oil prices have nearly doubled over the same period.
“We are in a very, very challenging market. Margins are reduced,” Nair said. “We feel the best way for us to grow and compete is through our distributor network.”
In the current environment, the company’s profits from its retail unit are “somewhere close to a rounding error,” said Mark Gilman, an analyst at the Benchmark Co.
He said Exxon was following competitors like Royal Dutch Shell and BP Plc in moving away from ownership of service stations.
“The retail gasoline business is a highly volatile and typically low return kind of business and thus the decision,” Gilman said.
Exxon made more than US$40 billion last year, most of which came from its oil and gas production around the world.
Meanwhile, Exxon plans to conduct exploratory operations in the Sulu Sea in the Philippines, company and government officials said yesterday.
The company is evaluating seismic data taken from the project area, ExxonMobil Exploration Co vice president Stephen Greenlee told reporters after calling on Philippine President Gloria Arroyo and Energy Secretary Angelo Reyes.
If the data is encouraging, the company will drill exploration wells starting next year, he said.
The Philippines now imports practically all of its oil requirements after some modest offshore deposits that were discovered during the 1970s energy crisis were exhausted.
“A drilling program could cost over US$100 million for us to explore the potential,” Greenlee said. “If we’re successful and we find what we hope to find, then the development of the site would [cost] several million dollars.”