A Virginia House of Delegates committee approved a bill today that would prohibit oil refiners from expanding their ownership of service stations despite warnings from the nation's top antitrust official that the proposal probably would increase gasoline prices for consumers.
The controversial measure was approved by the House General Laws Committee, 13 to 6, after intensive lobbying by oil companies that oppose it and individual service station owners who favor it.
Assistant Attorney General John G. Shenefield, head of the Justice Department's anti-trust division, urged the committee to defeat the bill. This bill "will in all probability bring about the high prices for refined products that the legislation was ostensibly designed to prevent," he said.
Shenefield and S. John Byington, who was consumer adviser to former president Gerald R. Ford, said the bill would prevent expansion of highvolume, low-overhead service stations by independent oil refiners and others.
"This bill is aimed at the independent refiner-marketer who is the No. 1 price competitor against the major oil companies," Byington told the committee. "If you pass this bill, you will eliminate the major price competitors in the business."
Lobbyists for the service station dealers argued that the bill is needed to protect station operators from unfair competition from the oil companies that supply them with gasoline. Most of the operators lease their stations from oil companies and they complained of unfair practices by the companies intended to force them out of business.
Their presentation to the committee included an NBC television film from the network's "Weekend" show alleging that Gulf Oil Corp. abused its service station operators in southern California. A Gulf spokesman presented the committee with a written statement denying the changes, which included claims that Gulf pressured its dealers to quit the business so it could convert their stations into discount operations.
Shenefield told the committee that state and federal franchise laws provide ample protection to dealers who lease stations from oil companies. He called the allegations of "anticompetitive conduct" against major oil companies "unsubstantiated" and said the bill would "needlessly impose significant costs on one of the most competitive sectors of the industry, independent refiners..."
The bill would permit those company-owned stations now in existence to remain in business, but would prohibit the companies from opening new stations.
Some committee members made an unsuccessful effort to extend a current moratorium on new station openings for another year while the assembly studies the issue. This approach was endorsed by the Fairfax County Consumer Protection Commission.
James Heizer, a spokesman for the Independent Gasoline Retailers Association, reminded the committee several times during the hearing that the 3,000 dealers in his organization are "voting Virginians." A lobbyist not involved in the issue said after the hearing, "Heizer and his group did a masterful job. They won it before the hearing began."
Del. Richard Saslaw (D-Fairfax) is chief sponsor of the bill. All three Northern Virginia delegates on the committee voted for the measure. They are Elise B. Heinz (D-Arlington), Ramond E. Vickery Jr. (D-Fairfax) and Warren E. Barry (R-Fairfax).
In other action today, the House Corporations, Insurance and Banking Committee approved a bill sponsored by Sen. Charles J. Colgan (D-Prince William) that would permit cities to combine their existing electric generating systems into larger, more efficient networks linked to other city-owned electric systems. The bill was approved by the Senate last year but was narrowly defeated in the House.