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Valero Sets Sights on Connecticut

WATERBURY, Conn. -- Valero Energy Corp., which has added 4,500 gasoline stations to its portfolio in the past seven years, is now turning its sights on Connecticut, reported the Waterbury Republican-American.

San Antonio-based Valero, which began marketing its Valero-brand gasoline to independent distributors throughout the Northeast in late 2002, sells its gasoline at more than 500 gas stations in the region and plans to boost that number to between 600 and 625 by the end of the year, said Ken Applegate, the company's vice president of retail marketing.

As a result, service stations decorated in the company's distinctive teal and yellow color scheme and featuring signs emblazoned with a giant "V" are beginning to pop up across Connecticut and southern New England. In the past 18 months, the company has opened 45 stations in Connecticut, including three in Waterbury, five in Bristol and single outlets in Plymouth and Watertown, as well as an additional 14 locations in Rhode Island.

The state passed "divorcement" legislation in the late 1980s that prohibits major oil companies from owning and operating their own service stations, and so the sites selling Valero gasoline in Connecticut are owned by about six different branded distributors. Those sites make Valero an up-and-coming player in Connecticut's retail gasoline industry, a business that has consolidated and undergone major changes in the past dozen years.

"We're excited about coming to Connecticut, we're excited about coming to the Northeast," Applegate said. "Our intent is to become as familiar and well-known a brand in the Northeast as we are in other parts of the country."

Valero added about 625 new service stations to its network in 2003, half of which were in the Northeast, Applegate said. The company plans to add about 300 new sites across the country every year for the foreseeable future, he said.

The new Valero stations join a shrinking list of retail gasoline outlets in Connecticut, said Michael J. Fox, executive director of the Connecticut chapter of the Gasoline & Automotive Service Dealers of America Inc.

Those numbers have declined dramatically over the past dozen years, Fox said. Where there were about 8,000 gas stations in Connecticut as recently as the early 1990s, today there are somewhere between 950 and 975. There are several reasons behind the decline of retail gas outlets, Fox said.

Two of the most significant are the state's tough environmental requirements for underground storage tanks and the fact that technological advancements, particularly those affecting pumps and pump islands, have made it possible for high-volume outlets to sell three and four times as much gasoline as their counterparts of a dozen years ago. That has pushed more and more of the lower-volume competitors out of business.

The amount of gas being dispensed by high-volume service stations has also increased the volume thresholds a retailer needs to qualify for pricing discounts from suppliers, making it even more difficult for a smaller operation to stay competitive.

In addition, establishing a new gas station has become an increasingly more expensive proposition, further reducing the pool of small businessmen ready and able to open new stations as older proprietors close their shops.
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