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Thread: Gas Station Owners Allege Price Fixing

  1. #1
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    Gas Station Owners Allege Price Fixing

    Updated 10:09 AM ET August 22, 2007


    SAN FRANCISCO (AP) - Nearly two dozen gas station owners in California sued Shell Oil Co., Chevron Corp. and Saudi Refining Inc., on Tuesday, claiming the companies conspired to fix prices for 23,000 franchise owners nationwide.

    The case filed in U.S. District Court in San Francisco seeks class-action status for the plaintiffs. It is similar to another lawsuit filed in 2004 by other California gas station owners that was thrown out by the U.S. Supreme Court last year. The new group of plaintiffs hopes the court will consider a slightly different argument.

    Like the previous case, the plaintiffs in this case say chairmen of the three oil companies met privately nearly every month starting in March 1996 for the "purpose of forming and organizing a combination." The lawsuit alleges executives destroyed documents from the meetings, and a now-defunct joint venture violated U.S. antitrust laws and caused artificially high wholesale gas prices in nearly every state from 1999 to 2001.

    In a new twist, the plaintiffs now say the venture violates a "rule of reason" governing antitrust matters.

    A Chevron spokeswoman, Stephanie Price, said the San Ramon-based company has not seen the lawsuit and she couldn't discuss specifics. She did say Chevron, which acquired Texaco Inc. in 2001, was vindicated last year when Chief Justice John Roberts blasted the previous case for its "very artificial hook."

    The lawsuit hinges on a marketing deal that, plaintiffs say, allowed former rivals to collude on prices starting in 1998, when Shell and Texaco Inc. formed Equilon Enterprises LLC to market gasoline in western states. They formed Motiva Enterprises LLC later that year for the eastern half of the country. Houston-based Saudi Refining also joined Motiva.

    Equilon and Motiva began operating when inflation-adjusted crude oil prices hit their lowest levels since the Great Depression, according to San Francisco-based lawyer Joseph M. Alioto, who represented plaintiffs in both the old and new cases. Yet gas prices soared for franchise owners, forcing them to pass on the cost to consumers or cut profit margins.

    "These executives get together and say, 'OK, we're going to raise Texaco's price to Shell's price, then we're going to raise both of them 50 to 75 percent, and we're going to do it after we've already had all these cost savings,'" Alioto said.

    The lawsuit doesn't seek a specific financial award. Alioto argues wholesale prices were higher by at least 20 cents a gallon and possibly as much as 40 cents per gallon from 1999 to 2001.

    Since an average gas station in the United States pumps about 100,000 gallons per month, Alioto says the energy companies owe each of the 23,000 station owners at least $240,000.

    Station owners had little choice but to pay higher prices. Franchises typically sign long-term contracts with oil suppliers, making it tough to switch to another brand or an independent supplier.

    A spokesman for the state-owned oil company of Saudi Arabia, of which Saudi Refining is a subsidiary, said they had received no official notification of a lawsuit. Representatives did not return phone calls and e-mails to Houston-based Shell, a subsidiary of the Royal Dutch/Shell Group.

    The case is Madani v. Shell, C07-4296-MEJ.
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    Anarchy in the USA

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    A lot of people are under the mistaken belief that gas station franchisees rake in the bucks when the oil companies go hog wild. In reality, just the opposite may be true. When I was working at C-stores a while back (around the time of the first Iraq war) they were making about a nickel per gallon. It was a high volume station, due to the fact that there wasn't any competition in that part of town (at the time) so they weren't starving for cash. But as the prices kept rising, the volume started dropping, and that hurt the franchisee, not the oil companies.

    And this was when gas went over ONE dollar. I imagine even more disasterous results when it hit the $2 and $3 mark.

    It's no coincidence that the vast majority of independently owned gas stations have ceased to exist since the 1980's.
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  3. #3
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    Yup. And probably by design by the oil companies. They make that much more money when they wn the gas stations. The fewer little guys the more they make.
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    an oldie but a goodie pre-911 article of the BBC. Pay no attention to the blatantly obvious men in front of the curtain...

    Analysis: Oil and the Bush cabinet
    By Katty Kay

    A majority of President Bush's new cabinet are millionaires and several are multimillionaires.

    According to information from financial disclosure reports, released by the Office of Government Ethics, most cabinet appointees have amassed their fortunes in stock options.

    Now a Washington-based think tank is questioning whether some of the cabinet members could face a possible conflict of interest.

    It is not unusual for American politicians to be rich. For the last two decades more than half of all cabinet members have been millionaires.

    Strong ties

    But the number of millionaires in this new cabinet highlights the influence of money in American politics.

    "You donąt come to Washington and give up your life and business unless you have a lot of money," said Charles Lewis, executive director of the Center for Public Integrity.

    What makes the new Bush administration different from previous wealthy cabinets is that so many of the officials have links to the same industry - oil.

    The president, vice-president, commerce secretary and national security adviser all have strong ties to the oil industry.

    Vice-President Dick Cheney amassed some Ł50m-$60m while he was chief executive of Haliburton oil company.

    Commerce Secretary Donald Evans held stock valued between $5m and $25m in Tom Brown Inc, the oil and gas exploration company he headed.

    Opening exploration

    The concentration of energy connections is so pronounced that some critics are calling the Bush government the "oil and gas administration".

    Condoleezza Rice at Republican convention
    Condoleezza Rice: Was a director of Exxon
    There are also questions about how energy policy decisions may be affected by the private financial interests of so many senior cabinet members.

    The Bush administration has already made it clear that it would be interested in opening up oil exploration in Alaska.

    It is a move opposed by environmental groups but favoured by energy companies. With oil prices rising in recent months this issue has taken on new urgency.

    Political apathy

    And this is not just the era of wealthy cabinet members.

    Don Evans: Held stock in oil exploration company
    One third of this senate are millionaires and 10 of the major presidential candidates also had financial fortunes in the millions.

    If wealth is a prerequisite of political office, it appears that poverty is often a hallmark of political apathy.

    Charles Lewis of the Center for Public Integrity said: "There is a perception of wealthy folks running the government and those who are not wealthy not participating in government."

    Of the 100 million Americans who do not vote, the overwhelming majority are lower middle class or poor.

    I can't imagine why anyone would allegde such a thing...
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