Tuesday, May 13, 2008

New prices swamp old gas pumps

REARDAN, Washington (AP) -- Small service stations are running into a problem as gasoline marches toward $4 a gallon in the United States: Thousands of old-fashioned pumps can't register more than $3.99 on their spinning mechanical dials.

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Chip Colville has old-style gas pumps at his Chevron station in Reardan, Washington.

The pumps, throwbacks to a bygone era on the American road, are difficult and expensive to upgrade, and replacing them is often out of the question for station owners who are still just scraping by.

Many of the same pumps can only count up to $99.99 for the total sale, preventing owners of some sport utility vehicles, vans, trucks and other gas-guzzlers to fill their tanks all the way.

As many as 8,500 of America's 170,000 service stations have old-style meters that need to be fixed -- about 17,000 individual pumps, said Bob Renkes, executive vice president of the Petroleum Equipment Institute of Tulsa, Oklahoma.

At Chip Colville's Chevron station in this eastern Washington town, where men in the family have pumped gas since 1919, three stubby, gray pumps were installed when gas was less than $1 a gallon. They top out at $3.999, only 30 cents above the price of regular gas at the station.

"In small towns, where you don't have the volume, there's no way you can afford to pay for the replacements for these old pumps," Colville said. "It's just not economically feasible."

The problem is worse in extremely rural areas, where "this might be the only pump in town that people can access," said Mike Rud, director of the North Dakota Petroleum Marketers Association.

Demand for replacements has caused a months-long backlog for companies that make or rebuild the mechanical meters -- and that is just for stations that can afford the upgrade.

For many station owners -- who, because of a relatively small profit margin on gas, aren't raking in money even though gas prices are marching higher -- replacing the pumps altogether with electronic ones is just not an option.

"The new ones run between $10,000 and $15,000 apiece," Colville said. "It's an expense that's not worth it."

Mechanical meters can be retrofitted with higher numbers when pump prices climb another dollar. The last time that happened was in late 2005, when gas went over $3 a gallon, and owners of the older pumps installed kits that went to $3.999.

The price of fixing the meters jumped in the past three years because old pumps are being phased out for new electronic pumps and demand for refurbished meters is down, Al Eichorn, vice president of PMP Corp., which makes the mechanical meters.

The Avon, Connecticut, company has hired extra employees, who are working overtime, but still has a 14-week backlog of orders, Eichorn said.

To deal with the problem, some state regulators are allowing half-pricing -- displaying the price for a half-gallon of gas, then doubling the price shown on the meter.

In North Dakota, regulators recently told service stations their mechanical pumps could use half-pricing, provided they use signs to alert costumers and find a permanent solution by April 2009.

South Dakota is preparing similar rules, officials say. And in Minnesota, rural service station owners whose pumps cannot display the right price are being told to cover up the incorrect numbers.

Across the United States, the average price for a gallon of gasoline rose past $3.70 Sunday, while diesel was selling for an average of $4.33 a gallon, according to AAA and the Oil Price Information Service.

The price does not compare with what many people in Europe pay, but with Americans accustomed to paying some of the lowest gasoline prices among developed nations, the price spike has come as an unwelcome surprise.

Small stations are struggling to make a profit on gas, even as the price rises. The small profit margin makes gas less lucrative than snacks and other products the stores sell inside.

"If gas is the profit driver and you are one of those guys with the old pumps, you're either evolving or getting out," said Jeff Lenard, spokesman for the National Association of Convenience Stores, a trade group that represents about 115,000 stores that sell gasoline.

"If you're just that kind of image of the '50s gas station where you have a conversation, fill up and have a cup of coffee, that's in the movies."

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