It’s a Longer Drive to Gasoline Pump as Stations Vanish : Land Costs, Oil Company Economics Driving Out Neighborhood Outlets

Not too many years ago, Nick Petrou’s Exxon gas station waged battle with three other stations at an intersection in North Hollywood. One by one, the competitors fell--replaced by a convenience store, a restaurant and a shopping center.

Five other service stations were leveled within a half-mile radius of the intersection of Victory Boulevard and Vineland Avenue, where Petrou, 37, operates the sole surviving gas outlet.

“Ten years ago, there used to be a lot of stations, but not anymore,” Petrou said.

In an environment where oil companies are asking dealers to sell ever-higher volumes of gas, and where rising real estate values make it more lucrative to open a mini-mall on a corner lot than a gas station, many dealers are being caught in an economic cross fire that is slowly forcing them out of business.

“They’re tearing them down left and right and putting in shopping centers,” said Dennis Tracy, 29, of Thousand Oaks as he filled up at the self-serve island of a Texaco station in Burbank. “You get used to going to one place and then it’s not there anymore.”

Declining Numbers

From 1967 to 1986, while the population of Los Angeles increased 21%, the number of gas stations declined 44%, from 4,641 to 2,582, according to the U.S. Census Bureau. Although separate statistics were not available for the San Fernando Valley, the Valley’s two cities, San Fernando and Burbank, showed an even greater decline.

There were 28 stations in the city of San Fernando in 1970, according to the State Board of Equalization, but only nine remained as of January, 1988. Of the 105 stations in Burbank in 1970, 48 remained at the beginning of this year.

“It’s not isolated to any one area,” said Mike Boris, Valley representative for the Southern California Service Station Assn., “It’s happening all over.”

Steve Shelton, executive director of the association, said the disappearance of service stations in the 1980s is due in part to overbuilding in the ‘50s and ‘60s, when oil companies recruited operators and “practically gave away the stations for free.”

Since the Arab oil embargo in 1973, the companies have sought to increase profits on the retail side, a strategy that has led to the demise of many stations, he said.

Lease Property

Most dealers lease property from the oil companies, are dependent on the companies for their supply of fuel and sometimes have little say in the decision to close their stations, Boris said.

In Glendale, John Gharibian said he might be the next dealer to fall victim to urban development. Glendale’s expanding central business district, he said, will soon smother the six-pump Exxon station he has operated with his brother on Central Avenue for 12 years.

The Glendale Redevelopment Agency has expressed interest in buying the property from Exxon, he said. And the prospect of losing his station to a planned hotel or office building, together with higher operating costs, will lead him to close shop soon.

“Whoever asks me about this business, I tell them, ‘Don’t get into it,’ ” Gharibian said as he installed a transmission in a Volvo at his station. “Putting money into this business pays less than putting money into the bank.” Gharibian plans to open a repair shop in Glendale where he can fix cars for an established and loyal clientele--without having to pump gas.

Especially in areas of the Valley where development has led to soaring real estate values, drivers no longer find gas stations on many street corners, but rather office buildings and mini-malls with stores that sell ice cream and yogurt instead of premium and unleaded.

The operator of the Texaco station in Burbank where Tracy filled up, Sergio Torosyan, decried the business logic he says is to blame for the demise of many gas stations. Too many business people, he said, think it is more profitable to build half a dozen video rental and convenience stores on a corner lot than one gas station. “Everyone only cares about putting money in their pockets,” he lamented. “They don’t care if the Valley has gas stations.”

Other service station operators blame high rents and other harsh conditions imposed by the major oil companies for driving them out of business.

“It’s getting really tight out there,” said one Northridge service station operator who did not wish to be identified. Oil companies often link the rent a dealer pays to the volume of gas sold at a station, he said. “You have to pump a lot of gas or the rent will go up,” he said.

Greater Efficiency

Jim Hardy, manager of marketing services for Chevron USA, said the major oil companies have had to make their retail operations more efficient as they battle for a share of the Southern California gas market, the world’s largest.

“In the past, you grabbed every corner. But properties are getting so expensive in the Southern California area you have to be very careful where you put those stations,” he said. “We can’t use the shotgun approach anymore. We use a lot more planning and market research.”

Shelton, of the service station association, believes in the future gas stations will offer fewer services but will sell more gas.

Kathy Simpson, who operates an Exxon station at the intersection of Canoga Avenue and Oxnard Street in Woodland Hills, has adapted well to the new way of doing business. Her station does a brisk trade, with 13 employees, 15 pumps and three service bays serving about 30 cars each hour, 16 hours a day.

“When we first got here, there was nothing, just cornfields,” she said. She opened her station 16 years ago, before the construction of Warner Center, a planned commercial and residential community. Glimmering office buildings now stand only a few hundred feet from her station, bringing executives and secretaries to the full-service pumps. “They don’t want the smell of gas on their clothes,” Simpson said. “They appreciate and want their service.”

Although the 1-acre parcel of land where her station stands in now worth $3.2 million, Simpson said she does not believe Exxon will sell the property. “They could knock it down, but they’d lose the market,” she said.