O&A Masthead

August 1999 Issue Highlights

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Northern California Dealers File Suit Against Equilon
California Stations Must Add MTBE Labeling
Giant Industries Opens New Arizona Terminal
Oregon Outlaws Urine-Filled Bottles


SAN FRANCISCO, CA. — A group of Shell dealers have filed a class action lawsuit against Equilon, claiming that the oil company raised rents and fuel prices in an attempt to drive independent franchisees out of business in California.

The suit was filed on behalf of 200 Northern California Shell franchise dealers in Contra Costa Superior Court, alleging fraud, unfair business practices, and anti-trust violations against Equilon, the marking joint venture of Shell and Texaco in the West.

Dennis DeCota, the executive director of the California Service Station and Automotive Repair Association, stated that Equilon was keeping prices high in an attempt to drive dealers to bankruptcy so the major oil company can take over the operation of their stations.

Marlin Swofford, a Shell dealer participating in the suit, said the rents on his stations in Pleasant Hill, Lafayette and San Ramon went up a total of $24,000 a month this year after Equilon eliminated its rent rebate incentive program.

"This has been a productive network for the last 20 years," Swofford told reporters, "and now they're just slapping the dealers in the face. You feel like you've been deserted, betrayed."

Jesse Perkins, a Shell dealer in Daly City, CA., said that his rent has increased from $2,250 a month in 1997 to his current rate of $12,987 a month. Perkins said that he had to lay off workers — including his two adult sons — to meet his rent. In their suit, the dealers are asking for an injunction to return station rents to the levels of August 1998.


SACRAMENTO, CA. — The California Air Resources Board has issued a new regulation requiring labels on all dispensers where gasoline containing MTBE is sold.

This regulation will affect virtually all service stations and gasoline marketers in the state of California. According to CARB regulations the label should read: "CONTAINS MTBE The State of California has determined that the use of this chemical presents a significant risk to the environment."

CARB Chairman Dr. Alan Lloyd explained his theory behind the new regulation, stating that "cleaner burning gasoline can be made without MTBE. The MTBE labels at service stations will enable motorists in the near future to see that they do have choices over the kinds of gasoline they can buy."

MTBE is present in almost all of the gasoline marketed within the state of California and the labels, therefore, would have to be applied on all fuel dispensers. As refineries revise their formula, some service stations may be able to remove the stickers. However, Evelyn Gibson of the California Independent Oil Marketers Association predicts that "MTBE is likely to be present in substantial volumes in gasoline until the substance is finally phased out on December 31, 2002 and the labels will tell consumers very little."

In addition, dealers and marketers may be unable to get any gasoline without the MTBE, despite their wishes and the wishes of their customers, because of the difficulty suppliers will have in converting their fuels to other oxygenate formulas. This may lead to misunderstandings with consumers who will find it difficult to refuel without the MTBE additive. CARB will set the deadline for the labels to be posted in the near future.


SCOTTSDALE, AZ. — Giant Industries Inc., has opened of a new terminal near Flagstaff, AZ., to serve the company's customer base in northern Arizona. The new terminal has a product capacity of 78,000 barrels and can load product for distribution at the rate of 10,000 barrels per day.

Giant CEO Jim Acridge stated, "With the growth in demand for gasoline and diesel fuel in Northern Arizona, we believe this facility will serve to improve the safety and efficiencies for fuel distribution in Northern Arizona." Acridge said that Giant has signed product sales and exchange agreements with a number of majors to supply the site "and we are close to reaching agreements with a number of others."


SALEM, OR. — Oregon lawmakers have passed a new law making it illegal to throw bottles filled with urine out onto the highway.

The Oregon Department of Transportation brought the problem to the attention of legislators after they discovered over 500 bottles of discarded urine during a cleanup of I-5 and I-84. It is believed that interstate truckers who choose to relieve themselves while driving instead of making a stop are the primary source of the bottles.

Under the new law, anyone caught throwing a waste-filled bottle out onto the roadway will be guilty of a misdemeanor and subject to a $250 fine.

Originally published in the August 1999 issue of O&A Marketing News.
Copyright 1999 by KAL Publications Inc.

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