The current oversupply of gasoline has stirred up a new round of local competition in the form of nickel-a-gallon reductions in pump prices and a return to the use of giveaways to attract customers.
Prices have been declining here for months, bringing the average for a gallon of gasoline to $1.409, compared to the April average of $1.454.
But the giveaways are just starting. Shell Oil, for the first time since 1972, is handing out something to encourage purchases of its gasoline -- in this case a National Football League poster. And Sunoco has begun a three-month program offering a discount on digital watches at participating Washington-area stations.
In addition to the company-wide efforts aimed at increasing gasoline sales, some individual stations are organizing their own promotions. One group of dealers in Northern Virginia has launched a contest featuring a 1982 Ford Escort as the prize.
Today's gasoline promotions contrast sharply with the shortages that plagued area motorists in recent years. The summer of 1979 was particularly difficult for Washington drivers, who waited in long lines for hours to buy gasoline from stations that opened only a few hours a day. Now instead of red flags -- the signal that gasoline pumps were closed -- many stations have signs advertising their giveaways.
But how long consumers will continue to get price breaks and free goods is uncertain.
"It will depend on the gasoline supply," said John Grasser, a Sunoco representative. "If in six months we are in the same supply situation as we are now, then the promotions will continue. If the supply tightens up, then I would think we would not have any promotions."
Grasser also said that this week's oil price increase by the OPEC oil ministers probably won't have any immediate impact on gasoline prices or gasoline giveaways.
"The marketplace will remain competitive and the price wars and promotions will continue" so long as companies and stations are dissatisfied with their gasoline sales and want to carve out a bigger share of the market, he said.
Gasoline sales are down nationwide about 5 percent from year-ago levels, according to industry and government statistics.
"American motorists have heeded the warnings to cut back on gasoline purchases," said Lee Cooke, a spokesman for the American Automobile Association's Potomac Division. "That reduction, plus the purchase of more fuel-efficient cars, has brought demand down."
The drop in demand, along with overproduction of oil by Saudi Arabia, has contributed to a worldwide oversupply of oil and petroleum products including gasoline. The new OPEC pricing agreement, which takes effect tomorrow, is intended to help stabilize the oil market through the coming year. That agreement, reached this past week by oil ministers of the Organization of Petroleum Exporting Countries, provides for a more unified price arrangement among producers and for a $2-a-barrel increase in the price of light crude oil. It isn't clear if OPEC's move will bring production more in line with demand or how much effect that success will have on U.S. consumers.
Meantime, the industry is trying to sell the gasoline it has.
Major oil companies began discounting prices to dealers months ago to bolster sales. Under a program started in May, Exxon gives dealers here and in some other parts of the country a rebate when their sales exceed a certain base volume. The rebate this month is four cents on each gallon sold in excess of 80 percent of the dealer's gasoline sales for October 1980.
Sunoco and Shell also have discount programs, in addition to their giveaways.
Before the 1973 oil embargo, companies and stations routinely cut prices when there was a surplus of gasoline. They also handed out gifts to attract customers to their pumps. Glassware was a popular item. So were steak knives and baseball cards. But those programs ended abruptly in the early 1970s when gasoline supplies suddenly tightened.
Now many stations here and elsewhere in the nation have turned back their clocks in hopes of repeating earlier successes. According to U.S. Oil Week, a trade publication, a California-based unbranded chain called USA Petroleum hopes to boost volume at participating stations by 20 percent through a contest featuring prizes worth a total of $250,000.
Oil company representatives are careful to say that their programs don't conflict with national conservation efforts. "What we are trying to do is reclaim customers who left Sunoco brand stations over the years," said Sunoco representative Grasser. "Our program isn't anticonservation because the new customer who comes into Sunoco is just buying gasoline he would have bought somewhere else. The bottom line is that there is no difference in total consumption -- the difference is in where he buys the gas."
Under the Sunoco plan, participating dealers in the Washington area give customers one coupon for each gasoline purchase they make. When the customer has three coupons, he may buy a digital quartz watch for $9.99 -- or about $10 below the regular retail price, Grasser said. The watch promotion ends Dec. 1.
Sunoco plans some new promotions starting Nov. 15 at stations outside the Washington area. Those will feature steak knives and McDonald's hamburgers.