Mamo still owns his first station, an Amoco in Washington that now operates as a Shell. Over the next quarter century--and in a manner more deliberate than accidental--he has built a network of stations around the region, acquiring them slowly, at first, and then, starting in 2009, at high speed. Riding a wave of industry transition, he went on a buying spree that expanded his empire from 25 to around 240 stations.
Within the industry, there's "a bit of a mystique" around Mamo, said Steve Holtz, CSP news director. (Click here for previous CSP Daily News coverage of Mamo.)
In the last few years, Major Oil has been getting out of the retail side of business. That's where Mamo found what he considers a "once in a lifetime" opportunity. Washington-area stations were among the first in the country to be spun off. BP sold nearly 200 area stations to Annapolis, Md.-based Eastern Petroleum Corp. in 2005. Germantown-based Mid-Atlantic Petroleum Properties LLC, among other jobbers, saw similar expansion in the suburbs.Mamo picked up nearly 200 Shell and Exxon stations and became the king of Washington's gasoline business. "Over the years we were able to grow the business one at a time, and now given the new opportunities we had, we could move really fast in the last couple of years," Mamo said. "But you don't have any choice either. You buy now or once it's sold, it's sold."
Mamo's 45 District Exxon and Shell stations represent about 42% of the gas stations in the city, the report said. Eastern Petroleum is in second place with 30 BP locations, according to current public records cited by the publication. A hodgepodge of small businesses and big jobbers operate the other three dozen or so stations under the banners of lesser-known brands such as Lowest Price Gas, Hess and Crown.
He managed to come up with money for his buying spree at a time when many businesses simply would not be able to tap the kind of 35% equity financing required. "For Joe to be able to get financing in the last two years, he had to have his ducks in a row before [the economy] fell apart," Holtz told the publication. Those successes set Mamo up as "someone to watch not only regionally but nationally," said Holtz, who thinks Mamo's enterprise may someday become a household name--the next Wawa or 7-Eleven.
Being able to capitalize on the evolving needs of Major Oil--and to use public relations pressure to help them see things your way--proved to be a useful skill, said the report.
When the Federal Trade Commission (FTC) ordered Exxon and Mobil to sell some of their stations as part of their merger, the order put several area properties into play. Mamo lobbied aggressively for the right to make a bid. But executives rebuffed his overtures. When the stations were sold to another distributor, one of Mamo's companies, DAG Enterprises Inc., sued, alleging racial discrimination.
Mamo also called lobbyists, who labored so energetically on Mamo's behalf that lawyers for Exxon complained in a March 2001 court filing: "DAG simultaneously aggressively pursued a lobbying campaign with Congress, the White House, and the Department of Commerce to influence the [Federal Trade Commission] divestiture decision."
Mamo lost the fight when the U.S. Court of Appeals for the 4th Circuit dismissed the suit in 2008. But a decade after Mamo's suit against Exxon, the now-merged firm's relations with him have changed dramatically.
In 2007, when ExxonMobil embarked on plans to sell its remaining Washington-area stations, the firm's director of U.S. retail sales, Ben Soraci, requested a meeting. It could have been awkward since Mamo's discrimination suit was in its eighth year. But Mamo and Soraci, who had spent time in Ethiopia while overseeing the company's East Africa operations, hit it off immediately .
"We broke bread as we joked and got to know each other on common ground," Soraci recalls.
Citing a confidentiality agreement, neither Mamo nor Soraci would discuss the details of the settlement that ended the lawsuit. But news that the case had been resolved broke on the same day in June 2009 that the oil giant announced it was selling its 30 remaining Washington stations to Mamo. Today, he owns about 200 Exxons and 40 Shells. All are in the greater Washington area, except 71 stations he purchased last fall in the outer boroughs of New York City.
And there is one population that has been distressed by Mamo's quiet acquisitions, said the report: Washington's independent station operators. As a few increasingly large jobbers have bought up the country's gas stations, dealers have been finding their new landlord is also their principal supplier--a situation, many of them say, that puts them at a competitive disadvantage.
Several Washington dealers banded together and took Mamo and ExxonMobil to court in 2009, charging unfair business practices. They say, among other things, that he has raised rents and the cost of gasoline, forcing them to up their prices, which has driven away customers.
Mamo dismissed most of the dealers' concerns as unfounded, said the report. "I think their future is as bright as it was in the past," he told the publication. "We love having tenants that have long service to the neighborhood and the community. We rely on them. So I don't see any changes in their future...we actually encourage them to stay."
Mamo also rejected the dealers' allegations that prices at the pump have risen in D.C. as a result of his company's growth.
He is frank, however, about his real-estate aspirations. "We are really a real-estate company," he said. "We're in it for the real estate."
He said predictions about "peak oil," alternative fuels and electric cars might eventually make gas stations obsolete. "Long term, the real estate is where the value is," he said.
"The market is changing," he added. "A lot of properties are being used for best and highest use, as the properties become more expensive. So the chances are less and less gas stations in the future."
Click hereto read the complete, in-depth Washington City Paper profile of Mamo.
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