Station operators seek price protection

Dealers in Md. warn delegates of closures

March 16, 2000|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

Warning that the days of "Gasoline Alley" might be numbered, Maryland service station dealers asked legislators yesterday to protect them from the cut-rate gas pricing of large-volume chain stores like Sheetz, Wawa and Wal-Mart.

But with consumers grumbling about soaring gas prices, members of the House Economic Matters Committee reacted warily to the dealers' appeal for legislation outlawing below-cost gasoline sales.

"If we do not do something to preserve the gas station as it used to be, you'll see many boarded-up stations out there," warned Mike Ingle, president of the Service Station Dealers Association and owner of an Amoco station in Bowie.

If gas stations close, he added, there will be fewer places for motorists to get their vehicles fixed, because the big-volume gas sellers do not have repair bays.

Spokesmen for the state's 1,400 independent gas station dealers told lawmakers that they face a growing threat to their survival from convenience stores, supermarkets and discount retailers that sell gas below cost, either as a loss leader to stimulate sales of food and other merchandise, or to drive the competition out of business.

Under legislation that passed the Senate last week, it would be illegal to sell gasoline in Maryland below the average wholesale price. The state comptroller's office would enforce the price floor, and could revoke the license to sell gasoline of any business that ignored an order to comply.

It is illegal to sell gasoline below cost in Maryland. But dealers said the law lacks teeth; it does not define cost, and it leaves enforcement to the dealers, who must file civil lawsuits against alleged violators.

Richard Agoris, who with a partner owns five Citgo stations, recalled how he sued Sheetz Inc., a Pennsylvania-based convenience store chain that sells gasoline, for selling below cost near one of his stations in Frederick County. After spending tens of thousands to pursue the case, the court found that Sheetz did sell below cost, he said, but did not hold the company liable because there was no proof it intended to drive its competition out of business.

"The majority of dealers just can't afford to bring suit," said Roy Littlefield, director of the Washington, Maryland, Delaware Service Station Dealers and Automotive Repair Association.

Ten states have laws barring or restricting below-cost gasoline sales, and dealers have pressed for legislation in 14 other states.

Spokesmen for Sheetz and for retailers objected to the bill, arguing it would be too hard to figure out the allowable price. The bill also would penalize businesses for giving consumers a break, they argued.

"We do sell gas as low as we can get it," said Michael Cortez, vice president and general counsel for Sheetz. "We strive every day to be as efficient and low-cost as we possibly can, and to give the benefit to the consumer."

Thomas Saquella, president of the Maryland Retailers Association, said the bill would have the state engage in price-setting, and he questioned what products would be next.

"Price is king," Saquella said. "The consumer is king. Nostalgia doesn't put money in your cash register."

Del. Anthony G. Brown, a Prince George's County Democrat, voiced similar concerns and suggested that the bill amounted to price-fixing.

But dealers argued that the bill would not lead to higher prices.

Most dealers charge as much as 20 cents a gallon more than the wholesale price, so there would still be room for gas price wars.

What the measure is intended to block, they said, are cases of large companies underpricing them by as much as 50 cents a gallon.

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