You are here
HOUSTON -- Shell jobbers facing contract termination in December due to failure to meet minimum volumes received a reprieve as the company will offer them more time, according to a report in Oil Express.
"We will give jobbers an additional year to achieve minimum contract volume if a drop in market demand is a significant factor in them missing the minimum," Hugh Cooley, Shell Wholesale Executive said in the report.
Jobbers across the country received the bi-annual letter on June 30, warning that those who do not meet minimal requirements could face an uncertain future. The company, however, is taking into account high gas prices and a downturn in consumer driving habits.
The Federal Highway Administration reported the number of miles driven in June was down 4.7 percent, or 12.2 billion, over June 2007, marking the eighth consecutive month of year-over-year declines in miles travelled.
"We will continue to review on a case-by-case basis and work with wholesalers who are close to making minimum volume thresholds," Cooley said in the report. To this end, the company concedes that industry sales are down 3 to 4 percent and it is "willing to take into consideration economic conditions if it believes the jobber has made a good faith effort to meet contract minimums."
Calls to the National Association of Shell Marketers from concerned jobbers have increased, according to Darrell Smith, president of the association. While the company has measured sympathy, Cooley told Oil Express this process is to be expected.
"In 2006 and 2007, we sent out fewer than 40 mid-year status letters and at the conclusion of each year had fewer than 20 wholesalers who were impacted," he continued. "Of the jobbers whose contracts were not renewed, more than 90 percent of their locations and volumes remained with Shell. Where circumstances were outside the wholesaler’s control, we have always provided relief and maintained contracts."
Moving past December, jobbers will have higher minimums. Shell stated in December 2007 it would raise base volumes to a minimum six million gallons for 2009, with increases of 250,000 gallons per year thereafter, Oil Express reported.