Bend Safeway plans for gas station

Safeway is proposing to build a new gas station in front of its west-side store on Century Drive, a move that may – or may not – help drive down the price of local fuel.

One of the company’s consultants, Portland architect Ken Diener, met with city planners and engineers Nov. 9 to explore the possibility of building a fuel station on an undeveloped corner of the Century Center parking lot, near the Simpson Avenue-Century Drive roundabout.

The station would hold six multiple-nozzle pumps and a small kiosk for the attendants, according to drawings submitted for the meeting.

Once a formal application is submitted, the city’s approval process could take several months, Diener said, which means the store probably wouldn’t get a functional station until the last half of 2007, at the earliest.

The entry of big-box stores into the gas-pumping business has traditionally tended to drive down local prices. In a practice known as zone pricing, major oil com- panies have tried to combat the big stores’ discounts by charging their own distributors lower prices.

That forces prices down in the vicinity of the big stores, but tends to leave them higher in areas like Bend that are farther from the competition.

Industry analysts say the oil companies are moving away from zone pricing practices this year, largely because it’s too complicated to keep track of multiple pricing structures in little micro-markets.

The abandonment of pricing zones has narrowed the average price gap between fuel in Central Oregon and fuel in the state’s most heavily populated areas, but gas here is still priced higher.

At $2.57 a gallon, Oregon’s average gas prices are the third highest in the nation behind Washington state and Hawaii, according to the national auto club AAA. Bend’s prices averaged even higher this week, at $2.66 a gallon, according to AAA’s Fuel Price Finder, an on-line gasoline price monitor.

Safeway tries to charge ”competitive” fuel prices in the 18 percent of its stores that have gas stations, Seattle-based spokeswoman Cherie Myers said.

That means the gas prices posted on the store’s price signs may not be the lowest or the highest in any given town on any given day. But Safeway Club Card users will routinely get 1-, 2- or 3-cent discounts off the posted prices, Myers said, and occasional promotions can bring price cuts that are much deeper.

Safeway stores in Washington are currently offering a 10-cent-per-gallon discount on top of the normal club card discount for customers who spend at least $50 on groceries in the store. Myers won’t say how much extra traffic the promotion is driving through the company’s pumps, but a similar promotion last July had customers ”lining up to fill their tanks,” she said in a press release at the time.

Similar promotions have been offered by Central Oregon’s Safeway stores, but shoppers in Bend have to drive 45 miles to the nearest Safeway fuel station in Madras to get their discounts.

Joe Palmeri, owner of Joe’s Westside Shell station on Galveston Avenue, said he figures a Safeway outlet might pull 10 percent of his business away.

He figures his station’s level of service will keep most of its regular customers coming back for more, but his business could still be hurt if Safeway’s discounts force him to slash prices too deeply to remain competitive.

”About a quarter of our profit comes out of the (auto repair) shop,” Palmeri said, ”but the rest is gas. So if our profit on the gas goes down significantly, we could be in trouble.”

Palmeri’s station is less than a half-mile from the Century Center Safeway, but other station owners say they think the effects of discounting may not reverberate much farther than that.

Jay Patel, manager of the Westside Texaco Food Mart on Newport Avenue, across west Bend from the Safeway, said he doesn’t expect the new station to affect his business. Most of his trade comes from people who live in the Newport neighborhood or up Awbrey Butte, he said, and the new Safeway is too far away to entice most of them to drive there just for gas.

”It might scoop up some people coming back from the mountain,” Patel said. ”Otherwise, I’m not sure it’s going to affect us that much.”

Diener met with city planners, engineers and fire officials in a process called a ”pre-application meeting,” designed to outline all of the requirements a developer will face before they submit a full application.

Diener said he doesn’t expect any major issues to arise. The gas station’s corner was originally intended to hold a drive-through restaurant, he said, so the area is already laid out to accommodate a steady stream of vehicle traffic.

Traffic would flow into the gas station through the shopping center’s parking lot, according to drawings submitted for the meeting. Ponderosa pine and juniper trees will be left standing between the station and the roundabout, and at least eight trees will be left standing on the gas station’s site itself.

No new street cuts would be necessary to bring traffic in from Simpson or from Century Drive, Diener said.

A formal application won’t be filed until Safeway planners and Century Center owner Bob Dietz agree on all the details, Diener said. It could take the city up to four months to approve the plans, then an indeterminate period after that to issue a building permit, he said.

Safeway is the third largest grocery chain in the nation, behind Kroger and Supervalu, according to Fortune Magazine. It runs 1,775 stores in 21 states and the District of Columbia, including three in Bend, one in Redmond and one in Madras.