1999 ANNUAL REPORT
MARKETING

Open Supply Bill Fails in California Assembly

A WSPA effort successfully addressed SB 123 (Peace), an open supply and uniform wholesale pricing bill, considered by the California Assembly Utilities and Commerce Committee during July. The bill, passed by the Senate earlier in the year, would essentially have done away with wholesale contracts between refiners and dealers, and would have required terminals to charge essentially the same price to all customers, regardless of market conditions or business relationships.

Through letters and personal visits, constituents delivered the message that SB 123 could lead to higher gas prices in California, and also strongly depress competition at the wholesale and retail levels.

Bolstering the opposition was a WSPA-commissioned study authored by petroleum economist Phillip K. Verleger, who concluded that SB 123 would lead to higher retail gas prices, especially in the Los Angeles and Sacramento metropolitan areas.

Opposition to SB 123 was not limited to the major oil companies as hundreds of jobbers, dealers and industry-related businesses voiced concern. Also on record against the bill were the California Taxpayers Association, California Chamber of Commerce, California Manufacturers Association, California State Grange, California Teamsters Public Affairs Council, and Los Angeles Mayor Richard Riordan, among others. The U.S. Department of Energy has opposed similar legislation in the past, calling it anti-competitive, and no such laws have yet been adopted anywhere in the country.

SB 123 was derailed when, after hearing testimony from both sides, no member of the Utilities and Commerce Committee made a motion to vote on the measure. The measure became a two-year bill, not eligible for hearing until the 2000 legislative session.

|| Top of Page ||