Exxon: not enough profit in U.S. retail gas operations

I have to feel real sorry for the poor folks at Exxon (and their competitors like Royal Dutch Shell and BP Plc):

Exxon Mobil Corp said on Thursday it is getting out of the retail gas business in the United States as sky-high crude oil prices squeeze margins.

...

"We are in a very, very challenging market. Margins are reduced," said Nair. "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 $40 billion in 2007, most of which came from its oil and gas production around the world.

"I think the decision came that it's more of a headache than its worth," said Oppenheimer & Co analyst Fadel Gheit.

Although the company does not release profit margin figures for its retail arm, Gheit estimated the stations' margin was between 10 percent and 15 percent, about one-third its margin on crude oil production.


MG - this would make the margin on crude oil production 30% - 45% so, apparently, they will sell their stations to SOMEBODY or SOMETHING who will be satisfied with a 10-15% margin? or not. If not, then that somebody or something would apparently have to increase the prices to raise the profits.

MG - but how real is PEAK OIL? If peak oil is a reality, and the world is at or past PEAK, then the future of running the gas stations is grim. And it makes much good sense to unload them to some sucker at an inflated price because as less and less oil is produced, less and less gasoline will be available, and more and more stations will have to close.