Robert Oliver may be the only PhD in the country who pumps gasoline for a living.
But this PhD pump jockey, doesn't just pump Exxon, which is emblazoned on the neon sign above his Silver Spring station.
Oliver is the first service station operator in the area to "debrand" and sell generic diesel fuel alongside his Exxon gasoline pump.
"There is no difference between Shell and Exxon, so why shouldn't I be able to sell Shell if I can get it at a lower price than Exxon and pass on that lower price to the consumer?" asked Oliver, a former college professor with a doctorate in business administration.
Four weeks ago, 13 of the largest oil companies tentatively agreed to settle a long-standing lawsuit by allowing about 45,000 service station franchisees to sell any brand of gas -- not just the one for which they are franchised -- as long as certain conditions are met. While hundreds of stations had debranded even before the agreement, most are still afraid of incurring the wrath of their franchisers and are reluctant to make the switch.
"This settlement doesn't go far enough," said Oliver, who got Exxon's permission to debrand his diesel fuel before the settlement was reached. "The oil companies can still erect barriers that keep me their captive customer."
Oliver is one of thousands of service station dealers across the country who have been fighting the major oil companies for years to get the right to pump "generic" gasoline.
"At the wholesale level, a major oil company can can buy any gas -- Chevron, Shell or Exxon -- and sell it to their dealers, so why shouldn't I be able to do the same thing at the retail level?" Oliver asked.
The generic gasoline case, one of the lengthiest antitrust actions in U.S. history, had its origins in a 1967 suit brought by Massachusetts Gulf station operator Paul J. Bogosian, who protested the company's requirements that he buy a certain amount of gasoline and other products to keep his franchise.
"We're like indentured servants in the early history of this country," said Oliver, who wears a tie to work and looks more like a car doctor than a mechanic. "All gas station dealers are a captive market -- we're the recipients of phenomenal price discrimination by the oil companies."
The settlement of the case, which was made a class-action antitrust suit in 1971, in theory would allow dealers to buy and sell gasoline and diesel fuel from any company they choose.
The companies involved in the settlement were Amoco Oil Co., Atlantic Richfield Co., Amerada Hess Corp., B. P. Oil Inc. (a unit of Standard Oil Co. of Ohio), Chevron Chemical Co., Cities Service, Exxon Corp., Gulf Oil Corp., Mobil Oil Corp., Phillips Petroleum Co., Shell Oil Co., Texaco Inc. and Union Oil Co.. The settlement does not affect gasoline stations owned and operated by oil companies, convenience store gasoline outlets or stations owned and operated by individual dealers.
Oil companies, largely to save transportation costs, commonly trade gasoline on the wholesale level. Thus, franchise dealers argued in the suit, one brand actually may have been refined by another oil company. Yet individual franchise agreements often made it difficult or impossible for retail dealers to buy gasoline from any company other than the one that granted the franchise.
"While a McDonald's franchisee can buy hamburger anywhere just so it meets the standards, I can't buy gasoline like that," said Oliver, who claims to have maintained an amiable relationship with Exxon.
In the lawsuit, the dealers charged that this practice constituted restraint of trade and violated the Sherman Antitrust Act because it tied a dealer to a single supplier even though the gasoline being supplied might have come from a different company.
Some analysts speculated that the settlement would allow service station operators to shop around for the cheapest wholesale gasoline. This, they said, could open the market, intensify competition in the already hotly contested gasoline business and maybe even start a price war.
But Oliver disagrees. He calls the lawsuit a "lost opportunity" whose settlement pleases few of the dealers it purports to help.
In theory, under the settlement, station operators could buy bargain-priced gasoline from wholesalers, lowering prices at the pump. But in fact, few station operators believe they will be able to take advantage of the proposed agreement because most are so closely bound to their oil companies.
Most franchisees have contracts that require them to buy a minimum amount of gasoline each month in return for the security of knowing they can always get gas from their franchiser/supplier.
Few operators are likely to jeopardize the security of these contracts by shopping for cheaper brands, said Phillip R. Chisholm, executive vice president of the National Oil Jobbers Council, a Washington trade association.
Some of the oil companies have tied up dealers by writing high minimum purchases into franchise agreements or by threatening to raise the rent or abolish the station's lucrative repair business, said Vic Rasheed, executive director of the Service Station Dealers of America.
There will be serious impediments to implementing the plan," Oliver said. "It's just not realistic for a dealer to incur the wrath of his supplier or landlord to debrand even though this settlement would ostensibly give him that right."
Each of the 13 companies has a separate settlement with its own conditions under which dealers can sell someone else's products.
Amoco and Texaco would require their dealers to purchase separate pumps for the generic gas. Chevron, Gulf and Mobil would force their dealers to install separate tanks as well as pumps. Exxon, Shell, Phillips and Union would let dealers use their existing equipment, but the dealers would have to indicate on the pumps that the gasoline is generic.
Some dealers undoubtedly will be deterred by the thousands of dollars they would have to spend to install the extra equipment, especially because most have short-term leases said Rasheed of the Service Station Dealers of America.
"It would minimally cost a dealer $50,000 to install this new equipment, and could cost as much as $250,000," Oliver agreed. "That's why the settlement is so empty. It's not technically feasible."
The major oil companies, without admitting guilt, also agreed to divide $25 million, plus interest and legal fees, among the 200,000 past and current franchise dealers who were parties in the class action. "This amount of money was insignificant to them," said Oliver, who figures his share of the settlement would amount to just $200 to $800.
In 1979, Getty Oil Co. and Sun Co. Inc., two of the 15 companies originally named in the suit, settled independently for a total of $11 million and gave their dealers the right to buy other companies' gasoline. But Sun's experience suggests the agreements will have a minimal effect.
The importance of brand loyalty to the operators is one reason, said Sun spokesman Robert A. Dietsche. The operator "selects a brand name because he thinks it's well accepted. He's tying his business fate" to that name and isn't likely to confuse his customers by offering some other brand, Dietsche said.
Oliver, however, thinks operators' loyalty to their franchise brand is overrated.
"The product is the product is the product," Oliver said. "It all comes out of the same tank. It flows through the same pipeline. There is absolutely no difference.
He thinks customer loyalty to brand names is overrated as well. "What's important is not the brand name, but location, location, location." For example, he said, "it's better to be on the far side of the light rather than on the near side."
Oliver points out that even the oil companies aren't always loyal to their own brands. "If selling just Exxon gasoline or diesel were so important to Exxon, why were the dealers encouraged by the company to use Shell oil when they ran out of unleaded extra?" Oliver asked.
Several other obstacles stand in the way of gas station operators who want to sell generic gas, said Rasheed of the gas dealers association. "The alternate sources of supply that the dealers once had are rapidly being taken over by the major oil companies, so the dealer remains very much a captive customer of his own major brand supplier," he said. "Since 1981, nine of the 10 largest mergers in the history of the U.S. were oil companies, and this reduced the option of supply."
Rasheed pointed out that Oliver's decision to debrand one of the fuel products he sells at his pumps was not unusual, even before the settlement. "It's very common for branded dealers to debrand their diesels because they can often sell it at as much as 8 cents a gallon less," Rasheed said.
Exxon dealers, for example, have been allowed for some time to sell diesel bought from another company as long as the pump specified that the gasoline wasn't produced by Exxon. So, when Oliver decided to debrand, he simply sent a telegram to Exxon informing the company.
But it was not an easy choice, Oliver conceded. "Debranding is a major effort. It takes a certain amount of intestinal fortitude. There was much consternation."
Oliver found that selling generic diesel improved his sales, and he had better terms with his supplier of debranded gas than with his Exxon suppliers. "Debranding made me a better businessman," Oliver said.
Exxon pressured Oliver to reconsider his debranding plan, without much luck. "The oil companies suggest that I'm a bad guy -- that I'm trying to pull something over on the consumer -- when the bastards have been doing it for 50 years," Oliver said.
When the company's sale representatives take on Oliver, they're dealing with someone who knows a lot more about the business than how to check oil and change spark plugs. To support his arguments about the benefits of the free market and open supply, Oliver comes armed with economic models and statistics about such technical concepts as demand elasticity and "the zero-sum game."
After earning his masters in business administration in the late 1960s from Sacramento State University in California, Oliver finished his doctorate at the University of Maryland while he served in the Air Force. For four years, the Buckeye, Ariz., native taught production management and finance at George Washington University, while he ran a gas station to help support his family.
"Teaching didn't fulfill all my needs. I didn't want to teach for the rest of my life and become old and stale," he said. His gas station business was flourishing, so he quit teaching and began work on a computer software turnkey system for service station operators and their repair facilities.
Oliver's Exxon station at the intersection of Randolph Road and New Hampshire Avenue, with four pumps and three bays, has about $100,000 in computer diagnostic equipment that most of his competitors lack.
Oliver wants Exxon to compete for his business with other suppliers. "I'm here to see that my customers don't subsidize Exxon to the maximum possible," Oliver said, smiling.
Oliver draws a parallel between debranding and the divestiture of the Bell System this January. "The open supply of gasoline would be to the oil industry what Judge Harold Greene, in his AT&T decision, intended to do to the economics of the telecommunications industry.
"We simply want to be free to do what the oil companies do," he added. "If we were, society, dealers and consumers would all be better off."