The Gulf station at 1100 Rhode Island Ave. NW sells three grades of gasoline, a variety of oil products and now, with the installation of a special coin-operated machine, it also sells air.

In addition, the station has converted one service bay into a laundromat with eight washers and five dryers. A second bay has been made into a convenience store stocked with eggs, bread, sandwiches, chips and soda.

"This is a good business if you have everything down to a science," said Koo Yuen, the man behind this station--and 15 others in the Washington metropolitan area.

At 28, Yuen has emerged as one of the biggest and most enterprising forces in the Washington gasoline retail market. Nine years ago he had one Exxon dealership. Today his company has 16 service centers pumping more than 1.5 million gallons of gasoline each month. Yuen, who was born in Hong Kong but grew up in Washington's Chinatown, has expanded his empire by transforming traditional stations with low-volume, unprofitable sales into multiservice, money-making centers. He has done that, he says, by making better use of station space, improving equipment and pricing his products low enough to attract customers but high enough to turn a profit.

"A lot of dealers oppose change," Yuen said. "Change is new and intimidating for them, and that has prohibited them from being innovative."

Yuen's innovations reflect the efforts under way throughout the gasoline industry to adapt to new price and supply problems. Plagued by shortages one year and surpluses the next, changes in traditional consumer buying patterns and uncertain world political conditions, gasoline retailers are finding it increasingly important to cut operating costs to a minimum and maintain a competitive edge.

"Dealers have been literally wiped out because they didn't realize what was going on quickly enough--one day a glut and one day a shortage and the competition was killing them and they didn't know it until it was too late," said Victor Rasheed, executive director of the Service Station Dealers of America.

The old-fashioned service station that dispensed free maps, full-service gasoline and routine window washing has been on the decline for nearly 10 years--ever since the first gasoline shortage of the early 1970s. At the same time, self-service pumps have blossomed and now account for more than 60 percent of the volume dispensed in the U.S., compared to less than 20 percent in 1974.

In addition, about one-third of the nation's service stations have vanished as operators shut down unprofitable businesses. In 1972, there were 278,528 retail outlets supplied by major refiners; in 1980, there were 188,530. The same trend has reduced District of Columbia stations from 322 to 216 during the six-year period ending in 1981.

The picture in the Maryland suburbs is mixed. In Montgomery County, the number of stations increased from 326 to 350 during the last six years. But in neighboring Prince George's County, the number has dwindled from 641 to 525.

The Virginia suburbs also registered a decline. One of the biggest losers was Fairfax City, which had 43 stations in 1977 but only 30 now. Alexandria has 60 stations now, two less than in 1977. Arlington has 69, seven less than in 1977. Figures for Fairfax County were not available.

The cause of the decline is apparent in the statistics on gasoline demand. Through most of the 1970s, gasoline sales rose dramatically, finally hitting a peak in 1978 when consumers used 7.4 million barrels a day, according to the American Petroleum Institute. Since 1978, however, use has been dropping. Consumers used only 7 million barrels of gasoline a day in 1979; 6.6 million in 1980, and 6.6 million in 1981. The annual rate so far for 1982 is 6.4 million barrels.

"This is the new environment we oil companies are going to have to live in," said Amoco's Jim Fair. "People are driving more miles every year, but they are driving smaller, more efficient cars . . . so there is almost flat demand for gasoline now, whereas there was a growing demand for gasoline in the past."

To survive in the new world of flat growth, companies are having to scramble to keep their existing customers and when possible attract new ones who have been buying from other companies.

Major companies such as Amoco, Shell and Exxon are renovating their stations, making them more efficient and installing new computerized equipment.

"We needed a stronger identity--a way to make our stations stand out," said Fair. "We removed a lot of the clutter that traditionally is around service stations to make them look more inviting to motorists."

Before launching its image program, Amoco interviewed thousands of dealers and motorists to determine what they wanted service stations to be. "We found they wanted a variety of things--clean, cheerful, sharp-looking stations and to be able to drive in, get gas and get out in two minutes but also to have full service as an option ," Fair said.

Shell is renovating its area stations, putting in new equipment and installing kiosk facilities for cashiers. The program began in 1980 and will be complete by 1985, according to Don Healy, a company official.

The emphasis in the Exxon modernization program is on updating facilities and putting in equipment that will save on manpower costs and allow the motorist to serve himself at a reduced cost, according to Andrew J. Wagner, field sales manager for the Washinton area.

New and remodeled gasoline stations today typically have one or two attendants who can operate pumps electronically from the inside of a secure, well-lighted kiosk. They frequently sell cigarettes, candy and other convenience store foods. And, after accepting the payment in advance, they hit the computer buttons authorizing the dispensing of the gasoline paid for by the motorist. The price paid for that gasoline more and more depends on whether the customer pays in cash or with credit card.

Sometimes these stations have service bays to tend to car repair and maintenance needs. Sometimes they sell only gasoline. Examples of the two kinds of stations can be found at Florida Avenue and North Capitol Street NE where Harry Murphy operates two Exxon dealerships. On one corner is the kiosk operation; on the opposite corner, a full service station with three service bays.

Both stations were designed for maximum security and minimum labor. They have computerized pumps that are more accurate and faster than the old pumps. And the service bays are more functional.

"They Exxon tore everything down and started over again," said Murphy. One of the stations had been built in the 1920s and "had 10 service bays built for Model Ts--you couldn't get any modern cars in them," he said. Those bays were leveled and a new kiosk built, converting the station into a gas-only operation.

The other Murphy station, which was built in the 1960s as a one-bay station, was replaced with a three-bay facility equipped with new lifts and other more functional equipment. The service bays are open from 7 a.m. to 6 p.m. After that, the station sells only gasoline and is operated by one attendant inside the locked kiosk.

Exxon began modernizing its Washington area stations in 1980 and will complete the job by the mid-1980s, according to company representative Pat O'Connor. He said some of the 386 Exxon stations here will be shut down over the next several years because of lease problems, because they don't adequately suppport the dealer or because they don't return enough of a profit to the company.

Although all of the new Exxon stations are being equipped with electronic pumps, a few have the capability of computing two different prices for gasoline: one for cash customers and one for credit card customers.

The Exxon at 1001 South Capitol St. SW is among the stations with the sophisticated new pumps. When the station reopened July 1, after being closed four months for modernization, dealer Herman McBee set the pumps to charge cash customers two cents a gallon less than credit card customers. He hopes the discount will increase his sales.

Koo Yuen was among the first in the Washington area to institute the two-tier pricing system for gasoline. In March, at the College Park Texaco station, for example, the price for credit card users buying unleaded regular was 10 cents a gallon more than for cash customers.

Yuen hasn't been afraid to dive into the gasoline station market, to take over failing stations and to try different ways of making them profitable.

"The opportunity was available to get the stations, and I had ideas on how to market," said Yuen, who reads the oil trade publications regularly in search of more ideas.

His approach varies, depending on where the station is located. In Northwest Washington, where there is a concentration of residents with foreign cars, the emphasis at the Yuen stations is on foreign car service. In College Park near the University of Maryland, where the gasoline competition is especially fierce because of the large number of stations, one of the Yuen stations undercut its competitors and touched off a gasoline price war this spring. And in the Shaw neighborhood, at 1100 Rhode Island Ave. NW, Yuen converted a failing gas-only station into a 24-hour store center that dispenses gasoline, a variety of food products and has a laundromat.

So far, the Yuen tactics have worked. The Rhode Island station, for example, was pumping 8,000 gallons of gasoline a month before Yuen took it over. Now it pumps about 50,000 gallons a month. Revenues from the other stations also are growing as a result of his particular brand of marketing.

Not all of Yuen's ideas work, however. He tried a video game room in one service bay area at the Rhode Island station, but it hasn't drawn the anticipated profits so the games are being removed. But Yuen is not discouraged. He plans to simply expand the laundromat operation in the adjacent service bay.