Last year, Gordon Walton and Ivor Elphage took over a service station on Carroll Street in the Takoma area of Northwest Washington, a tiny, close-knit neighborhood that they believed would bring them a substantial amount of business.
And it has. The two Guyana-born brothers-in-law said they have repair revenues of $25,000 and gas sales of 15,000 gallons a month.
But their landlord, Gulf Oil Co., has refused to renew their one-year lease because they are not selling 50,000 gallons of gas a month, a decision the two are challenging.
Their station has been hit by the combined effect of gas price wars, nozzle-pump laws and competition from suburban stations that is shutting down stations throughout the District, according to dealers and city officials.
Since 1980, 57 of the city's 243 gas stations have closed, according to the D.C. Energy Office.
Hardest hit are the smaller, full-service stations in locations bordering Maryland where gas is often about 5 cents less per gallon at spacious self-serve stations.
Dealers and owners said they would gladly pump less gas and recoup their losses through services, such as towing and repairs, but many are being shut down by the oil companies that hold their leases or supply their gas.
"When we bought this place, the former owner was only selling six, seven thousand gallons," Walton said. "They (Gulf) only gave us a year, and we doubled the output. Now they're telling us we can buy the station if we want; we still owe money from buying the business."
Gulf retail manager John Jelinek would not comment on the Carroll Street station. But the area's retail supervisor, William Stevens, said such decisions often occur when a station is not selling enough gas.
Vic Rasheed, executive director of the 60,000-member Service Station Dealers of America, said the number of stations in the United States dropped from 226,000 in 1973 to about 140,000 in 1981, largely because oil companies are practicing "pure coercion," forcing full-service stations to either fold or convert to self-serves.
"There's a higher profit margin on gasoline than on motor oil, batteries or repairs," Rasheed said. "That's why the oil companies would rather see the stations just sell gas."
The 78 conversions of District stations from full-service to self-serve between 1975 and 1977 led to a District government moratorium on such conversions in 1977.
"The District felt there was a certain loss to the consumer with the self-serve station," explained William Shoemaker, director of the Greater Washington-Maryland Service Station Association, an affiliate of SSDA. "You may save a couple of cents here and there at the tank, but there's no one to come out and jump your battery on a cold January morning."
But because customer services are less lucrative, the full-service station is often cut off even if it is operating as a profitable business, some dealers and their representatives said.
William Brooks, one of the few District dealers who own their stations, has operated a Gulf facility at 5120 Georgia Ave. NW since 1961. Brooks said he once sold 50,000 to 80,000 gallons a month. Nevertheless, he found himself in Walton's predicament in 1975 when gas price increases drove many of his customers to cheaper suburban self-serves.
Brooks bought his station from Gulf. But now, because he only sells about 30,000 gallons a month, Gulf is threatening to stop selling him gas, he said.
"They claim it costs them money to deliver my gas," said Brooks, who is considering using an independent supplier. "It would be the end for me," he said. "Most of my business is in (Gulf) credit cards. If they cut me off, there go my credit card customers."
District full-service stations not only face oil company pressure but also such disadvantages as the District gas tax of 13 cents a gallon, which often sends drivers to Maryland to gas up because the gas tax there is only 9 cents a gallon.
A District law that since mid-January has required stations to install vapor-recovery nozzles on their pumps also is said by dealers to have hurt their business.
The nozzle, mandated by the federal Environmental Protection Agency and designed to reduce spillage and gas fume pollution, is slower and more difficult to use than the standard pump. Dealers fear it is driving customers to Virginia and Maryland where the EPA mandate has not been implemented.
"I know of a couple of stations on the border whose gas sales dropped almost 1,000 gallons a day after that law went into effect," Shoemaker said.
Arthur Mitchell said sales at the Gulf station he has leased for 20 years at Eastern and Georgia avenues NW decreased with the nozzle law, which he claims sent many of his self-serve customers into nearby Silver Spring.
With his gas sales down to 30,000 gallons a month, Gulf has told him to "buy the station or get out," Mitchell said, and even if he buys the station, he has no guarantee that Gulf will sell him gas.
In Maryland, Shoemaker's service-station organization is lobbying for passage of a state law prohibiting oil companies from including minimum gallon-sales in their leases. The law passed in the state Senate last week and is before a committee in the House of Delegates.
But there is no such law in the District, and dealers face either explicit or implicit sales minimums.
John Atkins, Exxon Corp.'s retail services manager in Houston, said Exxon expects stations to sell 60 percent of their maximum gallonage allotment in their contracts each month. The company sent its Washington area dealers a letter on Feb. 1 warning them to adhere to that minimum.
Other companies assign minimum gallonages on a station-by-station basis, sometimes increasing rents to compensate for low gas sales.
"It's strictly revenues versus expenses," said Joe Zalewski, marketing representative for Sunoco in Lanham. "What we don't make in gas sales, we have to make up for in rent."
"If a station is not economically feasible, then it stands to reason that we should pull out," said Gulf's retail supervisor Stevens in Towson, Md. "And a lot of these little postage-stamp-sized stations are simply not making it anymore."
American Petroleum Institute economist Thomas Hogarty said, however, that in many cases oil companies are forced to vacate locations because the land beneath the stations is owned by a third party.
"This is true for perhaps one-third of all gas stations," Hogarty said.
The small station of the future, Hogarty said, will be two or three pumps in the parking lot of a convenience store, a concept already used by Southland Corp., owner of the 7-Eleven chain. The Dallas-based corporation has included pumps at most of its 2,000 stores built since 1974 and has built many of these stores on the sites of former gas stations.
Southland hopes to begin construction of its first District gas pumps at its 7-Eleven store at Kenilworth Avenue and Hayes Street NE, according to Frank Kitchen, the company's eastern region vice president in Philadelphia.
Several privately owned stations in the District also supplement their gas sales with other merchandise.
Robert Rinaudot, assistant manager of the Citco Station at 4200 Wisconsin Ave. NW, said his station pumps 80,000 gallons a month, largely because it also sells sandwiches, beverages, cigarettes and lottery tickets.
"People tend to stop here for their gas because of the store," Rinaudot said. He said lottery ticket sales have increased his gas business by about 10 percent.
Meanwhile, much of the gas market is going to the suburbs, where District motorists flock for less expensive gas that they can pay for with their oil-company credit cards.
"The problem is that . . . in the District no matter where you are, you're only 10 minutes from either Maryland or Virginia," Brooks said.