“Yeah?” Her voice was soft.
“Be happy. You deserve it.”
CHAPTER 26
“Tell me some good news,” Fletcher said, scowling and sitting erect on the edge of a chair in front of Mike’s desk.
“It’s a nice day,” Mike answered, attempting to inject levity into his partner’s morose mood.
“Then give me some bad news. It shouldn’t be hard.”
“It’s the dogs, Tom,” Mike insisted, as he had so often. “We can’t get them out of the system any faster than the leases will allow. They’re dragging the whole damn company into the sewer. It doesn’t matter what the margin is—they’ll never pump enough.”
“You have any bright ideas?”
Mike shook his head. “The only thing I can do is keep on closing outlets, the ones where the lease costs are less than what we lose by operating.”
“Hell, that is good news,” Fletcher said, his voice oozing sarcasm. “Why didn’t you tell me in the first place?”
“It’s shitty news and you know it!” Mike retorted, refusing to echo Fletcher’s sarcasm. “You understand the arithmetic as well as I do. When we lose volume, we shrink the float, and it’s the float that’s financing our losses.”
“How much time do you think we have left?”
Mike pressed his lips together and stared into Fletcher’s eyes. “Maybe twelve months.”
“Maybe!” Fletcher protested. “If it isn’t twelve months, then what the hell is it?”
“No way you can calculate it accurately—there are too many variables. The only certainty is that, in the absence of a miracle, XG runs out of money sometime in the next twelve months.”
“That’s just beautiful!” Fletcher said, his face crimson, his eyes squinting, “You know what really pisses me off?”
“What?”
“It’s my own damn fault. I let you con me into buying this black hole.”
Fletcher was right. For some time Mike had agonized over that simple reality. He had not only conned Fletcher, he had conned himself. In his blind rush to escape the confinement of corporate bureaucracy, he had miscalculated. Never once had he considered the possibility that gasoline margins would stay depressed, or that they might actually run out of money. But Mike was not a quitter. Even though economic conditions had forced him to consider bankruptcy, he had no intention of renouncing his dream without a fight. The dream was all he had left.
He leaned back, resting his head against his hands and lifting his feet on top of his desk. “Answer one question, Tom. I want an honest answer.”
“Shoot.”
“Suppose things had turned out differently. Suppose after buying this financial black hole, margins got fat and XG had made millions. Would you still be talking about how I conned you?”
Fletcher had no defense. He had entered into the XG deal with the same selfish motive as Mike. “So what’s your point?” he asked, scowling.
“I’ve already made it,” Mike declared, continuing to stare into Fletcher’s eyes. “You can’t suck and blow.”
Fletcher’s pride took a firm hold on reason. “Then I’ll just blow,” he said. “I’ve worked far too hard to sit around for the next twelve months and watch XG suck my real estate into the tank.”
“Are you saying you want out?” Mike asked.
“That’s exactly what I’m telling you. I’m in the real estate business, and I plan to stay in it. Gasoline was never meant to be anything more than a supplement. I certainly never intended it to be the tail that wagged the dog.”
Mike now truly understood why Paul Conrad had asked him why he thought he needed a partner. He had intended to benefit from Fletcher’s extensive real estate experience, but that had not happened. Throughout the entire eighteen months of the partnership, Fletcher had been about as useful as a security blanket. While Mike had been busy fighting and clawing to save XG, Fletcher had spent his time chasing his own interests. Now that it had started to rain, Fletcher was pressuring Mike to provide an umbrella.
Mike removed his feet from the desk and leaned forward. “How do you suggest we do it?” he asked.
“I’ll make it easy for you. Give me a buck and the holding company’s yours. We can do it today if you want. Just give me the word, and I’ll call my lawyer.”
Mike’s options were extremely unpalatable. If he refused to accept Fletcher’s offer, Fletcher would likely reverse the offer by formally inducing the buy-sell clause in the partnership agreement. If that happened, Mike would be out on the street with nothing but a dollar, an enormous disappointment, and a broken dream. If he accepted Fletcher’s offer, he would be the sole owner of a doomed business. Until it did die, however, there was still the remote possibility of a miracle.
“Let’s do it,” he said.
CHAPTER 27
The winds of change had begun to blow. The governments of oil producing countries were openly expressing concerns about the day when their oil reserves would be depleted. They worried that the price the world was paying for their oil was insufficient to replace the incomes they enjoyed while the oil was still in the ground. They had concluded that, as demand for oil continued to rise, a sellers’ market would soon arise. But if they were ever to succeed in increasing the price they received for oil, they must do so by acting in consort. A loose relationship of oil producing countries was solidified into a cartel known as Oil Producing and Exporting Countries, or OPEC.
In early 1973, OPEC convened a meeting in Tehran, Iran. The attendees included the oil ministers from the OPEC countries, representatives of the world’s seven largest oil companies, and politicians from oil consuming countries. The implications of the event induced thousands of members of the media from around the world to converge on Tehran. With the threat of cut-backs in oil production and the expropriation of oil production facilities owned by the oil companies, OPEC succeeded in extracting an agreement from the oil companies that forced them to pay an additional thirty-five cents for each barrel of crude oil produced and exported from OPEC countries.
The OPEC ministers then convened another meeting in Vienna, Austria. Its purpose was to force an agreement on further increases in the price of crude oil. While the meeting was in progress, the Arab-Israeli War broke out and, as a result of the war, the meeting failed to produce an agreement. Shortly thereafter, the meeting was reconvened in Kuwait City. There, an agreement was reached to cut back OPEC crude oil production. The diminished output quickly resulted in huge increases in the world price of crude oil.
Mike’s improbable miracle was at hand. As the price of crude oil escalated, so too did the margin XG Petroleums enjoyed on gasoline it purchased from Golden National. Paul Conrad deeply regretted that he had agreed to include the price escalation clause in the gasoline supply agreement between Golden National and XG Petroleums. The clause limited the gasoline price increases Golden National could pass on to XG to fifty percent of crude oil cost increases. While North American wholesale gasoline prices increased by forty percent, the price increase to XG Petroleums was limited to twenty percent.
Suddenly, XG was not only alive and well, it was on the threshold of an enormous bonanza. Its retail margin expanded to absurd levels. By Mike’s most conservative estimates, XG’s annual pre-tax profit would be at least eight million dollars. With slightly more than two years remaining on the Golden National supply contract, he had been blessed.
He decided to use the enormous profits to consolidate the company. He planned to purchase key pieces of real estate that were still being leased by XG from third parties. If the opportunity presented itself, he would also purchase any properties that Fletcher attempted to sell. To Fletcher’s dismay, the holding company still held rights of first refusal on all of his properties.
It wasn’t long before Paul Conrad arranged a telephone conference with Mike. He initiated the discussion with a classic understatement. “I guess you’re fairly happy with the agreement.”
Mike grinned. “My only regre
t is that we didn’t make it for ten years, Paul.”
“I’m sure that’s true… But listen up—I’ll give you ten years if we can renegotiate the price escalation clause.”
“Not possible. I need this agreement more than you can ever know, Paul,” Mike said. He would never tell Conrad explicitly that XG had come within a month of bankruptcy.
“It’s hurting Golden National more than you could ever know. I need some concessions,” Conrad pleaded.
Mike resorted to the same tactic he had used with Fletcher. “Suppose that the price of crude had gone down, instead of up. And suppose the price clause had been written to cover decreases. Tell me honestly: would you have been prepared to make concessions to XG?”
“That’s hypothetical, Mike,” Conrad retorted, even though he couldn’t help but concede Mike’s point. “We’re talking about reality here. Now I’m asking you for concessions. Is there any way we can work this out?”
“I’m sympathetic to your problem, Paul, but the reality is our agreement,” Mike said. “Both of us entered into it in the cold light of day with our eyes wide open. It’s not my fault that you suddenly see it as improvident.”
“Well said,” Conrad conceded. “I’ll share a private thought with you, Mike. If I were in your position, I would be just as tough. I’m going to warn you, though—if I can find a legal way to recover something out of that contract, I’m going to do it.”
Mike suspected that Golden National would attempt to recover part of its losses by increasing its gasoline trucking charges to XG. He studied the contract and discovered that the pricing strategy they had worked out applied only to gasoline bought from Golden National at the refinery gate, and did not include delivery. To eliminate the vulnerability, he set out immediately to replace his mode of transportation. His search led Mike to Amerada Tank Lines in Fort Erie, Ontario. Amerada’s geographic positioning and its vast trucking capability made it by far the most logical candidate to handle XG’s haulage. The logistics were so perfect that Mike was prepared to pay a premium to Amerada if it could handle XG’s entire requirement.
In a meeting with Dave Lasker, the president of Amerada, he negotiated a gasoline transportation agreement under which Amerada Tank Lines would pick up gasoline at the Golden National refinery in Buffalo and deliver it to XG’s retail outlets. The agreement effectively eliminated any possibility that Golden National could recover its losses by raising its trucking charges to XG. Even better, Amerada’s haulage rates were marginally lower than Golden National’s.
Seconds after Mike left Lasker’s office, Lasker telephoned his boss: Jim Servito.
CHAPTER 28
September 8, 1976. 11:45 a.m.
Mike hurried from his aging station-wagon toward Buffalo’s River Club, a swank restaurant on the shore of the Niagara River. Bob Bushing met him at the front door with a big smile and an outstretched hand.
“Bob Bushing?” Mike asked, reaching to shake his hand.
“In the flesh. You have any problem finding this place?”
“No, your instructions were great, and Dave Lasker gave me a good report on you.”
“I’ll have to tell him how much I appreciate that.” Bushing grinned. “But let’s go inside. I’ve reserved a table with a view.” Bushing led Mike to a table with a spectacular view of Lake Erie. “So you’re interested in a little spot action,” he said, attempting to initiate serious discussion.
Mike nodded. “It’s not a desperation move. It just makes a lot of sense. My company’s supply contract expires at the end of this month. I’m looking for some spot product.”
“What’s the volume?”
“Slightly over a hundred million.”
Bushing’s jaw dropped open. “Wow! You want to buy a hundred million?” he asked.
Mike grinned and shook his head. “I’ve already cut a one year deal with Golden National for seventy million. I’m looking for a spot price on all or a portion of the remaining thirty.”
Bushing continued to salivate while mentally calculating his commission on thirty million gallons. “I’ll make you an offer you can’t refuse. Where are your locations?”
“Don’t worry about locations. I want a rack price.”
“Sure. No problem.”
“First, I want to talk about your sources. Where do you get your product, and how do I know it meets government specs?”
Bushing grinned. “We buy most of it from refiners on both sides of the border. We buy some from Europe, and occasionally we get a hell of a deal from Caribbean refiners. It’s all top quality product.”
“Bob, if your price is right, and I decide to buy, I’ll expect you to provide me with certified specs.”
“Give me twenty-four hours. I’ll have all of the above and the right price for the whole thirty million,” Bushing promised.
Servito’s telephone jangled, interrupting the tranquility of his farmhouse office. “Shit!” he barked, and then pushed a scantily clad Dianne Thorpe from his lap. He chugged the remainder of his beer before grabbing his telephone receiver. “What do you want?”
“It’s Bushing. You told me to call if something big happened.”
“What big happened?”
“I just had lunch with a guy who wants to buy thirty million gallons. You interested?”
“Who’s the guy?”
“His name’s Mike King. His office is in Toronto.”
“What did you say his name is?”
“Mike King. You know him?”
“What did he look like?”
“Really good looking dude—he should be in the fucking movies. Tall. About six feet. Blond hair. Mid thirties.”
“I’m interested. But not right now. Give him a highball price, but stay with him. Keep bugging him for the business. Keep your price high until I tell you to drop it.”
“You’re breaking my heart.”
“One more thing… find out all you can about him and his business. I want a complete book on this guy.”
CHAPTER 29
A freakishly late September heat wave had driven the temperature into the mid-nineties. Sweat drenched the armpits of Mike’s shirt and visible stains marred his beige suit jacket. He was anxious to return to his apartment to take a cold shower and change, when the phone rang.
“King,” he barked.
“Mike, it’s Evelyn,” Owen Christian’s secretary said. “How are you?”
“Hot and sweaty. And you?”
“Fine. I’m sorry to bother you, but I had to call…” There was a pause, and he thought he heard a sound like coughing. “Owen’s dying. He had a stroke in his office this afternoon. He isn’t expected to survive.”
“Where is he?”
“In the ICU at Toronto General.” There was another muffled pause.
“Are you okay, Evelyn?”
“He’s been fine, until today. He was on the phone with someone at Canam… thank God I was in his office.”
Thirty minutes later, he entered the hospital’s lobby.
“Hi, stranger,” a familiar voice intoned, causing his heart to race. Mike stopped and wheeled to his left. Karen was no more than ten feet from him, smiling her perfect smile and still looking unreasonably attractive in a pale pink summer dress. Her face and body showed absolutely no signs of the years that had elapsed since their last meeting.
His mind blurred, his blue eyes glazed in disbelief. “Hi,” he said, weak kneed. “What on earth are you doing here?”
“I do volunteer work,” Karen said, walking closer. “One of my outpatients had to be admitted tonight. I’m here to see her. What are you doing here?”
“A former boss of mine had a serious stroke today. I’m here because my conscience wouldn’t allow me to forget him.”
“How serious is it?”
“His secretary said he isn’t expected to live.”
“I’m sorry,” Karen said.
“Don’t be. I hated his guts. Do you know where intensive care is?”
&nbs
p; Karen pointed to the elevator doors to Mike’s right. “Go to the second floor. You’ll see the duty nurse when you get off—she’ll tell you what room he’s in. Will you be there for long?”
“I suspect not… why?”
“Would you be interested in a cup of coffee later?”
Mike grinned and winked. “I’ll be back in thirty minutes. Where can I meet you?”
“Just take the elevator to the basement floor and follow the signs to the coffee shop.”
Thirty minutes later, Mike joined Karen at a small, circular table in the most distant corner of the shop.
Karen pointed to a styrene cup on the opposite side of the table. “You still take it black?”
Mike smiled and nodded. “Thanks for remembering.” He could scarcely believe he was finally, incredibly, exactly where he had wanted to be for so very long.
“How is he?” Karen asked.
“Comatose,” Mike replied, shaking his head. “I couldn’t wait to get out of there. All I could do was stand there and look stupid.”
“I don’t understand. If you hated the man’s guts, why wouldn’t your conscience let you forget him?”
“I’ve asked myself that question at least a hundred times in the last hour. It was what he did for me that I couldn’t forget. He hired me and gave me my first real chance. He believed in me and gave me opportunities when no one else would. But then when it counted, he ran for cover.”
Karen’s eyes widened. “What did you do then?”
“I found a partner and bought a retail gasoline company. The partner and I parted company almost two years ago. Since then, I’ve struggled on alone.”
Karen stared at Mike, intrigued. “You can’t just end the story there. How did you get into the oil business?”
“It’s a very long story. I don’t want to bore you.”