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Gas prices hit $9.99 in protest by station owners

Jonathan Berr for NBCNews.com

A Lukoil station in Mount Laurel, N.J., was selling gas for $9.99 a gallon Wednesday in a protest by station owners.

Durango Weeks of Lawnside, N.J., didn’t think there was anything unusual this afternoon when he pulled into a Lukoil station outside Philadelphia until he took a look at the price, which stunned him. It was $9.99 a gallon.

“My (fuel) light was on,” he said, adding that had he noticed the price he would have filled up elsewhere.

Weeks had stumbled on an unusual protest by more than 50 Lukoil franchise owners in New Jersey and Pennsylvania who more than doubled their prices to protest what they consider to be the unfair practices of the Russian-owned oil company.

At issue is Lukoil’s practice of  “zone pricing,” in which the company sells gasoline to  stations in close proximity to one another at prices that can vary by as much as 25 cents a gallon, according to the New Jersey Gasoline-Convenience-Automotive Association. The practice is driving customers to buy their gasoline at cheaper stations, eroding the business at Lukoil franchises, according to the franchisees.

“I feel they have been gouging us,” said Kay Kezbari, who owns a franchise in the Philadelphia suburb of Mount Laurel, N.J, adding that his colleagues have been “begging” Lukoil to lower prices. “We are not looking to get rich.  I am trying to survive.”

Kezbari's usually busy station was mostly deserted Wednesday, although a few motorists were filling up, perhaps not noticing the posted price.

Lukoil, for its part,  accused the the trade group of distorting its views. The company  defended zone pricing in a statement as a “commercially reasonable practice used by gasoline marketers for many years, which is fully compliant with New Jersey statutes."  A company spokesman could not immediately be reached for further comment.

Though most gas station owners depend for their profits on convenience items rather than fuel sales, they depend on gas to draw customers in so they can purchase higher-margin items and services such as automotive repair. Franchisees, many of whom are immigrants, usually invest six figures in their businesses including yearly fees.

The action by the Lukoil station owners is unprecedented and represents the culmination of years of frustration with the oil company, said Sal Risalvato, executive director of the station owners group.

“They have suffered with image problems and high prices that are making them uncompetitive,” he said.  “Enough is enough.”

The protest will end after 24 hours, although station owners will consider future pricing actions if their demands are not met, Risalvato said.

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