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Posted at 03:32 PM ET, 05/12/2011

Gas magnate Joe Mamo responds to news of antitrust probe

The local gasoline magnate who is being investigated by D.C. Attorney General Irvin B. Nathan for possible antitrust violations said today that he is not responsible for rising prices at the pump.

Eyob “Joe” Mamo, primary owner of Capitol Petroleum Group in Springfield, issued the following statement a day after Nathan disclosed the investigation:

The high price of gasoline is of great concern to everyone. Twenty-five years ago as a struggling young worker, I saw an opportunity to be an entrepreneur and took significant financial risks to invest in a growing market. I started CPG in D.C. and have been servicing D.C. motorists for more than two decades. And while I’ve been successful and now own several dozen gas stations in the area, I simply own them - I do not operate them and I do not set the price of gas at the pump. Nearly 90 percent of the sites I own are managed by individual franchisees. As a distributor, I purchase gasoline from major refiners which I then deliver and sell to the local operators. CPG and other distributors are prohibited by law from determining the prices at which their service station operators sell gas to the public. My mark-up has decreased over the past year and is not the cause of the high pump prices which I simply don’t control and which are set by each individual operator. In fact, the city makes more money on each gallon of gas than CPG does. The unfortunate reality is that the price of gas is inflated by the world market and multiple other factors, primarily crude oil costs, taxes, refining costs, and distribution and marketing. There is a gross misunderstanding about the difference between a gas station owner and a gas station operator, and about how a gallon of gasoline is actually priced. I hope with education on the real issues at hand, we can put this matter to rest.

For more on Mamo’s business model and how his ownership of both a large number of the region’s gas stations and a major distribution operation is potentially problematic, read my Post story and Christine MacDonald’s City Paper profile.

Part of the issue is that the operators of at least of some of the gas stations that Mamo owns are required to buy their gas from his wholesale operation, or “jobber.” That, one operator of a Mamo station told me, means he is captive to whatever price Mamo’s jobber charges.

By  |  03:32 PM ET, 05/12/2011

 
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