DEENA WINTER / Lincoln Journal Star | Posted: Monday, April 17, 2006 7:00 pm
Mayor Coleen Seng suggested Monday that the city may want to get back in the gasoline business by opening its own station and using profits to build streets.
The city opened a gas station in the mid-1920s and sold gas until the 1960s, when the station closed. The city still has the authority to sell gas and oil, an authority the U.S. Supreme Court upheld years ago.
During an informal meeting of the City Council on Monday, Seng said she has directed staffers to look at bringing back a city-owned gas station and using it to meet some of the $135 million in street needs.
The three Republicans on the City Council immediately said they opposed the idea.
Councilman Jon Camp chuckled when Seng began to talk.
Later, he said: “That kind of threw me.
“I thought maybe we learned our lesson in the ambulance business,” he said. The Fire Department took over the privatized ambulance service in 2001 and has accumulated a deficit of about $642,000.
“I don’t think the city has any business getting into competition with the private sector,” Camp said.
Ken Svoboda thought Seng was joking at first. “I was waiting for there to be a rim shot,” he said.
He would “absolutely not” support Seng’s idea, he said: “Major, resounding, absolutely not.”
The other Republican on the council, Robin Eschliman, said she didn’t think local gas station operators would “appreciate that.”
Democrats on the council were hesitant to embrace the idea.
Said Annette McRoy: “I believe there are better ways for us to raise revenue, although it was creative.”
Jonathan Cook said it’s an interesting idea, but problems arose the last time the city was in the gas business.
“I would be reluctant,” he said.
Patte Newman said she didn’t know how it would work, and Dan Marvin said, “I don’t know” and then declined to comment.
Historian Jim McKee wrote about Lincoln’s history in the gas business in his column in Sunday’s Journal Star, but the Seng administration was talking about it before that occurred.
Her chief of staff, Mark Bowen, said they’ve discussed the idea for a couple of months. But he was careful to say it’s all preliminary.
“It’s something we’re going to keep looking into to see if it’s a realistic possibility or not,” he said. “It’s worthy of taking a look at.”
Seng said staffers will study the price the city would charge and the cost of going into business.
Mark Whitehead of Whitehead Oil Co. — which supplies or operates 36 stations in Southeast Nebraska, mostly in Lincoln — said Seng likely doesn’t realize how tough the industry is. Whitehead’s father got into the business in 1959, just before the city got out.
“I think it’s somewhat shortsighted to think that this is gonna be some sort of panacea or way for the city to make money,” he said. “It doesn’t seem like it’s a wise investment for city tax dollars.”
When told any profits could go toward improving streets, Whitehead responded: “And the deficit would go (toward)?”
He said the industry is competitive, price-sensitive and prone to a lot of turnover, which customers don’t always see because ownership can change hands without visible signs at stations.
It costs hundreds of thousands of dollars to buy gas tanks, dispensers and a canopy, he said.
“You end up getting into a business where you put a couple million dollars of investment in and sometimes have to sell for a nickel and as much as 10 cents per gallon under cost,” he said. “That makes it pretty difficult to recoup those costs.”
He said he’s not aware of any other cities that own gas stations.
News reports indicate Lehi, Utah, officials are considering building a convenience store and leasing it to a private entity to ensure its gas supply in an emergency. The private owner would have to ensure the city would have access to 20,000 gallons, according to the Daily Herald in Utah. The idea is facing some opposition there.
Because Whitehead also supplies gasoline wholesale, he said he’d “love to talk to the city” about supplying any venture.
Reach Deena Winter at 473-2642 or dwinter@journalstar.com.