Virginia Sunoco dealer Paul DiBari's assessment of proposed state legislation on gas stations was incomplete in Sunday's editions. His full quote: "It is superfluous to say that the bill is inadequate because of the grandfather clause in the bill (that) will protect company-operated businesses already in effect."
The battle against Big Oil has been declared locally and, as in other David-and-Goliath stories, Big Oil so far is losing.
Fueled by a general nationwide distaste for the big oil companies and by the independent service station dealers' hunger for a bigger slice of the gasoline industry pie, many jurisdictions, including the District and Virginia are following Maryland's lead in chasing Big Oil out of the service station business.
For its efforts, Maryland has earned the reputation as the "Vietnam of the oil industry."
As in most wars, the sides -- there are at least three here -- are sharply divided, with each claiming its cause will do the most good. They are Big Oil, the oil producers and refiners who are prohibited by recent legislation in Maryland and the District from operating service stations and are being threatened with a similar law in Virginia; the station operators, who usually lease the stations from Big Oil and who want more autonomy; and the independent refiners, who are small and usually operate chains of stations offering lowpriced gasoline who claim they will be cut out of business unfairly and consumers will end up paying higher prices for gasoline.It's Big Oil the public is after, not little oil, the small independent refiners say.
"There has been an awful lot of legislation initiatives against Big Oil," said Mike McDonald of the Maryland Petroleum Association, who represents Big Oil companies. "It's popular to take a pot shot at Big Oil."
Maryland is credited with beginning the drive to shoot down the big guns of Big Oil in 1974 when the General Assembly passed a law prohibiting the oil companies from operating service stations. The rationale was that when gasoline is in short supply, as in the Arab oil boycott of 1973-74, the oil companies make more gasoline available to their make more gasoline available to their own stations than to the independents. The Supreme Court upheld that legislation last June after oil companies complained that the law was anticompetitive, serves special interest groups and would raise prices to consumers.
Since then 36 other states are considering similar legislation.
The independent retailers added that the oil companies are converting their full-service stations to gas-and-go operations that can sell gasoline at about the same prices they pay for it wholesale.
The independent dealers who lease stations from the oil companies also claimed that they were being harrassed by the companies to sell their brand of tires, batteries and other goods, and sell a certain volume of gasoline in order to keep their leases on the stations. The independent dealers said many of their colleagues lost stations because they couldn't produce the level of sales that the companies demanded.
Some of the Big Oil companies are accused of raising rents to force out dealers who don't follow orders. The companies deny these charges.
Charles F. Smith, proprietor of an Exxon station in Baileys Crossroads, recounted the story of a neighboring station owner who Smith said "went gas and go because he had a heart attack" and succumbed to the company's pressure.
In 1977, Maryland passed a law placing a two-year moratorium on the conversion of full-service stations to gas and go. The General Assembly in considering an extension of that moratorium, and the independent dealers lobbied for it last week.
The independent dealers claim the big oil companies are out to make big bucks by converting stations to economical gas-and-go operations, but neglect the needs of customers who require new batteries, state inspections and other services."The gas and gos are not even required to have restrooms," one Virginia service station operator said.
But the oil companies say they are servicing customers by saving them money with the lower prices and quick service of the gas-and-go stations.
The District meanwhile passed two laws similar to Maryland's, and Virginia is contemplating legislation to prohibit Big Oil from operating service stations. The Virginia House last month passed such a law, and the Senate is scheduled to entertain public comment on it Monday.
Unlike Maryland, where the independent retailers are more eager to eliminate oil company ownership, Virginia lawmakers chose to exempt from its law stations presently owned by the oil companies. Under Maryland law, company-operated service stations must "divorce" themselves from the station and either sell it or lease it to a dealer.
"The (Virginia) bill is superfluous," lamented Virginia Sunoco dealer Paul DiBari, who said the proposed law would not help him compete with the company-owned Crown gas-and-go service station across the street. The Crown station, which rises like a brightly lit Oasis to the gas-thirsty and money-hungry driver but which is a "gas-and-go-to-hell" operation to competing dealers, sold 299,000 gallons of gasoline in December compared to DiBari's 47,000.
Crown "will not have to get out. As it is now, the Crown sells gas at the price it costs me wholesale," DiBari said, pacing the floor of his small station in Baileys Crossroads and wringing his grease-smeared hands.
Caught in the middle are the small refiner-marketers who don't produce the petroleum products, but refine them and sell them through their own stations. They claim that because they are so small, they should be exempt from the anti-Big Oil laws, but they are not.
The plight of the small refiner-marketers such as Hess, Ashland and Marathon has been noted by John H. Shenefield, the assistant U.S. attorney general who heads the Antitrust Division of the Justice Department. In remarks before Virginia legislators, Shenefield said Virginia's proposed law and other "divorcement" laws "would be highly inequitable and seriously anticompetitive."
The legislation "would needlessly impose significant costs on one of the most competitive sectors of the industry, independent refiners, who have not been shown to engage in anticompetitive conduct, in order to protect independent dealers from unsubstantiated allegations of anticompetitive conduct by larger integrated petroleum companies," Shenefield said. "Indeed, the very breadth of this legislation suggests that its effect would be to restrict rather than promote competition."
"The proponents (of the law) have been quite skillful in playing on the public hostility toward Big Oil," said Robert Bell, an Ashland Oil executive. "Laws are often embraced by legislators because they think they'll punish Big Oil."
Bell said the law ironically may injure small refiners and help the large oil companies because station operators still will buy products from them.
While the conflict is just beginning in Virginia, Maryland is beginning to fashion regulations to deal with its newly upheld law. This month, public hearings will be held on proposed comptroller of the Treasury to enforce the "divorcement" law.
The proposals define Big Oil's role in its relationship with the station operators and restrict the companies from offering them virtually any financial assistance.
The companies can own the service station property but cannot operate it. The proposals prohibit companies from telling station operators what hours they should work and the number of stations they can operate, what volume of gasoline and other products to sell, or from suggesting incentives for gasoline sales.
Many of the oil companies are reserving comment on the proposals until their final form is worked out. But Ashland's Bell predicts that gasoline prices will rise as a result and the legislation will "remove from the marketplace one of its most competitive aspects."