Some Lukoil dealers, in protest, raise price at the pump to $10

Lukoil stations are known for their curious fuel pricing: very competitive in one neighborhood, laughably high just a few blocks away.

But prices at some Lukoil outlets in New Jersey and Pennsylvania went insanely crazy Wednesday in a publicity stunt engineered by independent dealers unhappy with the wholesale prices they are forced to pay to the oil company.

"We wanted to make a bold statement about the severity of our problem," said Shobhan Chokshi, manager of the Lukoil at Delaware Avenue and Spring Garden Street in Philadelphia, where the price of regular was jacked up to $10 a gallon Wednesday.

More than 50 franchise owners in the two states organized the protest after they said their supplier, Lukoil North America L.L.C., was slow to respond to their long-standing complaints about high wholesale prices.

"The dealers just can't survive anymore," said Sal Risalvato, of the New Jersey Gasoline Convenience-Automotive Association (NJGCA).

The dealers say that Lukoil's method of charging different wholesale prices by zones - common in the oil business - leaves some outlets unable to compete. Some dealers say Lukoil's wholesale price per gallon is higher than the retail price offered by nearby competitors.

Independent dealers and fuel companies often are at odds over pricing, but it is unusual for dealers to conduct such a high-profile protest. The one-day price increase got widespread news media attention.

A spokesman for Lukoil, which is owned by a giant Russian oil company, said officials "value our network of independent dealers," but blamed the dealers association for misrepresenting the dispute.

"We deeply regret that the NJGCA, a trade lobbyist, has apparently encouraged public misstatements and ill-conceived actions which harm consumers, rather than engage in constructive dialogue," Michael G. Lewis, the company's general counsel, said in a statement.

Lewis said zone pricing "is fully compliant with New Jersey statutes governing the sale of motor fuel."

Chokshi said his employees passed out leaflets to potential customers Wednesday to make sure nobody actually filled up with $10 fuel.

He said independent dealers, who rent their stations from Lukoil and are locked into franchise-supply agreements, have few alternatives to make up for losses.

"Our option is to turn in the keys and walk away," he said.