Two big oil companies supplying gasoline to the Washington area -- Texaco and Sunoco -- have begun giving rebates of up to 7 cents a gallon to service station owners who maintain high sales volumes in the face of what has become a nationwide gasoline glut.
At the same time, three other big suppliers for this area -- Amoco, Exxon and Gulf -- have reduced wholesale prices to their dealers by up to 3 cents a gallon.
The actions by the five companies, which together supply 75 percent of the gasoline used here, represent the first significant price cuts in Washington and nationwide since the Iranian oil cutoff sent oil prices skyrocketing more than a year and a half ago.
Local service station owners say some of the big companies are going further than price-cutting by pressuring them to stay open longer hours and trim their profit margins in order to increase sales.
As a result of the price-cutting and other pressure, the average price of a gallon of gasoline in the Washington area has fallen .7 cents to $1.31.2 since late August, according to a Washington Post survey of service stations.
"It's more like a little gas war," said Arlington Exxon dealer Ron Spurling. "The company (Exxon) is constantly on your back to sell."
An Exxon spokesman said that the company does not, and legally cannot, pressure its dealers to set prices at specified levels. But the spokesman said Exxon provides "counseling service" to dealers in which the company explains how lower prices may lead to higher volumes and thus higher profits.
Federal energy officials are concerned about the gasoline sales push but say there is nothing they can do about it.
"It's contrary to what we're seeking to do -- reduce gasoline consumption in this country," said U.S. Department of Energy spokesman Jack Vandenberg.
But Amoco's regional distribution manager for this area disagreed. The manager, Buz Warfield, said the new price competition "won't change how much gasoline is bought. A dealer who is meeting the competition is not violating the spirit of the conversation program. He's just trying to get his piece of the pie."
Sunoco's rebate to its dealers amounts to 7 cents per gallon for every gallon that dealers can sell in excess of 70 percent of the gasoline. Sunoco is allowed to supply them under the federal gasoline allocation rules.
For example, McLean Sunoco dealer Sam D. Shin said he is eligible to receive 52,000 gallons from the company this month. Thus he will get 7 cents back from Sunoco for every gallon he sells over 36,400.
Encouraged by this, Shin has cut his pump prices by 10 cents a gallon in the past few months -- to $1,18.4 for self-service regular and $1.24 for unleaded -- by trimming his own profit margin. Shin said he doesn't know yet whether he will come out ahead after getting a rebate -- or even whether he will sell enough gasoline to get one.
The rebate for Texaco dealers is 4 cents for every gallon they sell over 60 percent of their allocations.
In addition to the rebate, Texaco reecently cut its wholesale price 2 cents a gallon. Amoco also recently cut its wholesale price 2 cents; Gulf 2 or 3 cents depending on grade; and Exxon 1 cent on unleaded regular.
The nationwide gasoline glut is a result of continuing high worldwide oil production and the apparent determination of American motorists to continue using 8 to 10 percent less gasoline than they were in 1978 before the Iranian crisis.
According to the American Petroleum Institute, an organization sponsored by the big oil companies, Americans used less gasoline in August than they have in any year since 1971.The nation's stocks of crude oil, gasoline and other petroleum products are at some of the highest levels ever -- so high that oil tankers are sitting offshore in the gulf of Mexico and elsewhere in the world with nowhere to unload.
District of Columbia energy chief Chuck Clinton said that D.C. motorists used the same amount of gasoline -- 17.2 million gallons -- in July as they had the previous July when the oil shortage had driven prices up and consumption down. "We've developed a conservative habit," Clinton said.
How long that will last is an open question. According to the Lundberg Letter, a respected petroleum marketing publication, the public can sense that the real, inflation-adjusted price of gasoline in 1972 dollars is only 63 cents and is actually falling quite rapidly as current pump prices drop.
"The public may begin to perceive (gasoline) as a relatively good buy," the publication said. "The test will probably not come until next summer, when the opportunity for discretionary driving surges once again."
Gasoline is for sale for as little as $1.15 a gallon for self-service regular at one Virginia gas-and-go station, according to the Post's price survey.The highest price found was $143.4 a gallon for full-service premium unleaded at a D.C. station.
The Post survey also showed sharp differences in average prices for gasoline in Maryland, Virginia and the District due to the recent imposition of new taxes in Virginia and the District.
Virginia drivers can expect to pay about the area average, $1.31.2, but in the District they will pay more: $1.34.6. In Maryland the average price is lowest at $1.28.
Several D.C. dealers said that the imposition of the new 6 percent sales tax on gasoline had caused drops of up to 50 percent in sales volumes, causing such severe losses in revenue that they couldn't afford to cut pump prices at the same time.
"We got our regular customers and we got to live with them, that's all," said Raj Gnanasundram, manager of a Sunoco station in Northwest Washington.