1998 ANNUAL REPORT
Marketing

Local Issues PRG, Grassroot Action Blocks Divorcement/Uniform Pricing Proposals

A spate of local ordinances which would have had a severe impact on both wholesale and retail gasoline marketing was blocked this year when WSPA and its member companies teamed up to defeat so-called divorcement measures in San Diego County and in the San Francisco Bay Area.

The measures would have imposed branded open supply and uniform wholesale pricing regulations and forced refiners to relinquish control of company-operated stations. Divorcement advocates, led by the Automotive Trade Organization of California and the United Dealer Group, exploited regional retail gasoline price differentials to resurrect at the local level legislation previously defeated in Sacramento.

The divorcement effort unfolded when the San Diego County Board of Supervisors passed the state’s first regional divorcement ordinance and a majority of cities in the county began to follow suit. Later the City and County of San Francisco passed a similar ordinance and many surrounding Bay Area cities and counties began to consider the same approach under the umbrella of the Association of Bay Area Governments.

Based on the fact that such ordinances would have caused a widespread loss of jobs and a probable increase in gas prices, WSPA’s newly-appointed Local Issues Petroleum Resource Group (PRG) organized a grassroots response. Activities included several demonstrations by employees whose jobs would be eliminated and testimony at city council meetings by WSPA and member company representatives as well as employees of company-owned stations.

Also involved was an outreach program to the media and editorial boards and participation on radio talk shows. These efforts were critical in reaching local audiences that had been primed by divorcement advocates against the industry’s position.

These and other efforts began to pay off when the San Francisco supervisors overwhelmingly rejected divorcement. Shortly thereafter, the City of San Diego decided to drop its divorcement measure, setting the stage for the San Diego County supervisors to rescind their initiatives.

In a parallel effort, the Local Issues PRG provided advocacy assistance to the California advocates on a bill sponsored by Assemblywoman Susan Davis (D-San Diego) which would have allowed local governments to regulate gasoline marketing at the local level. The proposal died in committee. Ms. Davis held a field hearing after the fact in San Diego which drew a great deal of media coverage and public complaints about gasoline prices in the area.

Gas Price Lawsuit Filed in Hawaii
The Hawaii Attorney General’s Office has filed a lawsuit alleging that 13 refiners have systematically overcharged customers in that state and have been involved in price fixing for many years.

Governor Ben Cayetano is an active supporter of the suit which claims that refiners and wholesalers are making an extra $200,000 a day in profits. Hawaii’s action has received attention from consumer groups and the media in San Diego, triggered by the recent failure of divorcement and open supply proposals in San Diego City and County.

Fuel Pricing Study Advances in Arizona
The divorcement issue was hotly debated in the Arizona legislature, as a bill sponsored by the Arizona Dealers Association was narrowly defeated. As a result of the bill’s failure, a new piece of legislation supported by WSPA, was passed to continue a joint legislative Fuel Pricing Examination Committee. Gasoline pricing will continue to be a high visibility issue in Arizona, as additional divorcement legislation will likely surface next year.