LIBERTY GASOLINE IS GOOD NEWS

On a whim today, I decided to research these new Liberty gas stations that are becoming ubiquitous in the Tri-State area of Maryland, the District of Columbia and Virginia. Imagine my surprise to learn that this gasoline supply outfit is a Virginia founded and operated company, and pumps up fresh American Gulf of Mexico crude via pipelines to Fairfax and Richmond refineries. It's a remarkable story. Finally my conscience can rest. Goodbye Saudi and Venzuelan oil.

For my research efforts, I now have a family gasoline pump wholly American, and I salute with all I have—dear Virginia Liberty!

Thank you, Mr. Holtzman...

THREE AREA OIL PRODUCERS qt the turn of this new century were tired of competing against Sheetz's low gasoline prices so they did something about it. They formed Liberty Petroleum LLC to sell unbranded gas at some of their convenience stores.

In 2001, Bill Holtzman, owner of Holtzman Oil in Mt., Jackson, (Shenandoah County) Va., has joined with Blackie Bowen of Ewing Oil in Hagerstown and Frayser White of Valley Oil in Charlottesville to form the new company. Earl Cox, a former oil industry executive, is heading up the Liberty Petroleum operation based in in Staunton, Va.

Holtzman said the three Liberty owners met while serving on committees with major oil companies. "I said that I was going into the private brand business. The three of us said, 'Yes, it's a good idea to join together because we're not in each other's territories.' That was about a year and a half ago, and now things are really rolling."

Within the next few years, the trio hopes to sign up 90 oil distributors (also known as jobbers) to form a group of as many as 2,000 C-stores east of the Mississippi selling private-branded Liberty gasoline. About 95% will be conversions of existing stations, the balance new builds.

"Liberty is a LLC and the three of us own it," said Holtzman. "It's like a major oil company. Holtzman Oil, Ewing Oil and Valley Oil will all buy from Liberty, and Liberty will sell to other jobbers. We just picked up another one in Bedford [Pa].

"It could snowball with monster numbers. There are lots of jobbers who need a private brand. For gasoline customers, it's 40% who buy by brand and 60% who buy on price. This puts us on both playing fields and gives us the ability to compete with Sheetz."

Altoona, Pa.-based Sheetz has 270 C-stores, mostly in Pennsylvania, Maryland, West Virginia and Virginia. Its sales are estimated by Hoover's Online to be $1.6 billion, or about $5 million per store. Another competitor, mainly in Pennsylvania, is Wawa with 500 stores that do about $1 billion in annual sales.

In the past, Holtzman and Bowen have spoken out against Sheetz's business tactics. Holtzman complained about a so-called Sheetz C-store at the Mt. Jackson Interstate 81 exit really being a truck stop, while Bowen testified before the Maryland legislature in support of a law that would outlaw pricing gas below wholesale cost. It passed, as did similar legislation in Pennsylvania and West Virginia that prevents gas retailers from selling below cost for extended periods of time to drive out local competition.

The Liberty Petroleum may yet encounter another competitor, the Petroleum Marketers Association of America (PMAA) based in Arlington, Va. "We've formed the Petroleum Marketers Oil Company LLC, and we're looking into it as a separate company," said Holly Tuminello, director of communications at the PMAA. "We're just in the beginning stages, talking to potential suppliers. We haven't yet come up with a brand name, but it will be a national brand."

Tuminello said driving the PMMA strategy is concern over "all the mergers of big oil companies. Eighteen months ago we did a survey of our members and they are looking for an alternative to the majors." Through its state associations, PMAA represents 8,000 oil distributors.

As for the Liberty operation, Tuminello said, "They're members of our organization, and we think it's a great idea and support their efforts."

Holtzman said Liberty's gasoline supplier is Energy Merchant Corp. out of its Baltimore office, but the gas comes from the Gulf of Mexico by two pipelines into Fairfax and Richmond, where jobbers will pick it up in their own tanker trucks.

Sheetz and Wawa sell their unbranded gas at four to five cents below the price at Exxon, Chevron and Amoco stations. Liberty will be in that same price range. All claim their gas is the same as that of the big oil companies, the only difference being in the additives used. In fact, Liberty's pumps display a logo which says, "100% Certified Quality Gasoline."

Echoing Holtzman, Cox said demographic changes are dictating that C—store owners consider selling unbranded, less expensive gas. "This is an important marketing situation, where the older age population, 45 to 50 years old and up are more brand loyal, where they say, `What's good for Dad is good for me.' However, Gen X and Gen Y people look for price and convenience. Sheetz has done a good job in that area because they're capturing the customer that is price conscious."

Cox said Liberty Petroleum is basically a licensing agent. "Liberty does not invoice or have receivables. We license them [other jobbers] to use the brand, and we earn a fractional cent on aper gallon basis."

Liberty hopes to have funneled of between 50 million and 60 million gallons by the end of the year, said Cox, earning $.002 on each gallon purchased by participating jobbers. This will pay for Liberty's salaries, office overhead, travel and advertising. By next year, Cox hopes volumes increase to between 75 million and 100 million gallons.

A native of Mount Jackson, Va., Bill Holtzman initially began his career in agriculture in the Shenandoah Valley of Virginia. In 1972, while working full time in the apple industry, he purchased a small, local Gulf fuel business for $37,000, and worked tirelessly in the evenings and on weekends to launch his new business, Holtzman Oil. Today, Holtzman Oil Corp. is a Chevron, BP, Exxon, Texaco, and Liberty supplier in Virginia, Maryland, and West Virginia, and is one of the largest employers in Shenandoah County, Virginia.