Quick Stats

Quick Stats

    Poll

    Poll

    The Guess Corp. recently announced plans to open member-only convenience stores catering to the ultra-affluent. Do you think this is a viable concept?

    You are here

    WEST UPDATE

    California petroleum marketers are fighting a new requirement for dispenser temperature monitors. Montana legislature changes several provisions in a price gouging law, while in Colorado two small petroleum marketers have taken a $1.4 million bite out of a giant supermarket chain for selling gas below cost.

    By Hank Behar

    NEW YORK -- California citizens typically pay 25 cents more per gallon of gasoline than any other state, thanks to its initiatives in fuel efficiency and smog control. "But some new proposals being made to the Division of Measurement Standards may be ill advised," declares Jay McKeeman.

    McKeeman is the government relations director of the 400-member California Independent Oil Marketers Association (CIOMA), and what he's talking about is the proposal by a dispenser manufacturer to certify temperature compensation meters for its equipment.

    The meters are meant to adjust for temperature-caused changes in gasoline, which contracts when cold and expands when warm. McKeeman is concerned that consumers and petroleum marketers can get hurt badly if the Division of Measurement Standards acts too hastily on the proposal.

    "We recommend a pause in the certification of these devices for several reasons," says McKeeman. "First of all, certifying the meters for only one manufacturer's dispenser can cause confusion in the marketplace; in addition, the accuracy of these meters has not yet been fully established; and it has not been determined how these meters will affect underground storage tank monitoring and vapor recovery; and, most significant, there is no definitive proof that there is a problem in the first place that requires temperature correction equipment."

    These arguments, and others, have been directed toward the Measurement Standards Division. The Division, earlier last week, certified the equipment over CIOMA objections, without contacting CIOMA or anyone else in the regulated community. CIOMA is weighing its legal options at this time.

    Here is a vivid example of a petroleum association's successful attempt to persuade a state legislature (in this case, Montana's) to change a proposed bill to make it beneficial to both consumers and petroleum marketers. This is the official language of Montana's price gouging bill before and after it was changed (new wording in capital letters, original in italics):

    "A price is prima facie unconscionable if it
    is 10%
    EXCEEDS BY 20%
    or more above the average price charged by a person for the essential good or service during the 30 days before the declaration of a state of emergency or the finding of an abnormal market disruption
    OTHER PERSONS WITHIN A 50-MILE RADIUS OF THE LOCATION OF THE ALLEGED OFFENSE FOR THE SAME ESSENTIAL GOOD OR SERVICE DURING THE 7 DAYS PRIOR TO THE ALLEGED OFFENSE."

    TRANSLATION: The original bill defined price gouging as a 10 percent rise in prices during the 30 day period before a declaration of a state of emergency. The Montana Petroleum Marketers Association (MPMA), with executive director Ronna Alexander at the helm, lobbied successfully for a change that makes price gouging an incident-based rather than a market-based offense. The bill now defines price gouging as a more than 20 percent increase over the average price charged by others within a 50-mile radius during the seven day period prior to the price rise.

    "The former definition of price gouging carries too low an increase (10 percent) and is market driven," says Alexander, "which the MPMA feels is unfair to petroleum marketers throughout the state. We fought for the incident-based ruling, restricting the time period to seven days rather than 30, and fortunately the state Senate agreed with us.

    "We also fought for and won a much less draconian set of penalties, limiting the fine to civil penalty of $1,000 per incident with a maximum of $25,000 for the duration of the emergency. Formerly, the penalties included six months in jail, and up to $20,000 for each incident."

    Here's how the official section on penalties looked before and after:

    "Section 7. Penalties.
    (1) A person who knowingly violates a provision of [sections 1 through 7]
    8] is guilty of a misdemeanor punishable by up to 6 months incarceration and a fine of up to $2,500 for each incident for an individual and a fine of up to $20,000 for each incident for an enterprise. A violation of [sections 1 through 8] also constitutes a violation of 30-14-103
    IS SUBJECT TO A CIVIL PENALTY OF UP TO $1,000 FOR EACH INCIDENT, WITH A MAXIMUM PENALTY OF $25,000 FOR THE DURATION OF THE EMERGENCY OR ABNORMAL MARKET DISRUPTION."

    "The bill has a long way to go before it's passed," notes Alexander, "but the hardest part is done and we're confident it will pass."

    Sometimes the little guy actually wins. It happened in Colorado recently when two small petroleum marketers in the town of Montrose brought suit against the giant Kroger supermarket chain (over $60 billion in sales) for selling gasoline below cost in violation of the state's Unfair Practices Act. The two marketers -- Parish Petroleum, with three locations, and Ray Moore Tire and Petroleum Service, with one -- were awarded $1.4 million in damages.

    Kroger was running a program in its King Soopers and City Market stores called Buy Groceries/Get Gas that gave gas discounts to shoppers who purchased more than $100 in groceries over a 30-day period. At times, City Market was selling gasoline at 40 to 50 cents below cost, causing Kroger to take a loss one year of $511,000 on gasoline alone -- which they were apparently willing to do. As a result, a price war broke out, forcing retail gas prices in Montrose to drop below wholesale, which is when the two service stations filed its successful lawsuit.

    Parish Petroleum and Ray Moore Tire and Petroleum are members of the Colorado/Wyoming Petroleum Marketers Association, whose executive vice-president for the past 25 years, Roy Turner, is the association's leading lobbyist in both states. He will be especially busy in the coming months as Colorado's attorney general spearheads an initiative to amend the Unfair Practices Act, which has been on the books since 1937.

    • About

    Related Content

    Related Content