Gasoline Nozzle Newsletter

LXVI Edition January 2005

Gasoline Retailers Association of Florida

214 StevenageDrive Longwood, Florida32779

407-774-9700 Fax 407-788-3860 e mail

Pat Moricca President SSDA /NCPR-AT

Service Station Dealers of America

Gasoline Retailers Association of Florida is a non-profit association representing Independent Gasoline Retailers, Convenience Stores, Gasoline Service Stations, Repair Shops, Tire Retailers, Truck Stops and Associates throughout Florida. Our goal is to improve the interests of these independent businesses and the motoring public. Cooperation with insurance companies provides benefits for our members. These benefits include money-saving programs for group health, workers' compensation, casualty, property and gasoline tank liability insurance. Benefits also include financing to purchase your gasoline station property and much more.

VISIT OUR WEB SITE FOR THE LATEST GASOLINE

INDUSTRY INFORMATION AND BENEFITS

Now that the New Year is here and looking back how far we have come

More and more independent gasoline dealers own their property than ever before and the future looks better. Exxon lost their Supreme Court appeal of overcharges and a Jury awarded 8 Shell dealers from Mass., 3.3 million dollars as they found Shell guilty with a plan to drive independent dealers out of business. Dealers from Florida to New York to California have filed law suits against Shell; and a Maryland gasoline dealer won a termination lawsuit that Shellfiled against him. As more and more information about how the Oil Companies are eliminating independent gasoline dealers comes to light, the better our lawsuits are in a court of law.

Its amazing how gasoline station ownersfrom all brands have the same problems in all 50 states. I receive e mails from European countries independent gasoline station associations with the same problems from the same Oil Companies.

Meanwhile the Oil Companies news sounds like a broken record, profits doubled, record quarter, best quarter ever, best year ever, healthy quarterly net incomeand on and on.

Ever since the mergers of Oil Companies and less competition, gasoline prices have gone out of sight while the Oil Companies are breaking profit records of outrageous proportions!

Shell Finally Faces Suit

Outcome could affect thousands of dealers From Mass. Retailers

Boston – A group of Shell dealers recently had their day in U.S. District Court, more than four years after filing a case against Royal Dutch/Shell. A judge listened as the Shell franchisees’ attorney laid out their allegations of unfair pricing measures, a plan they say was invoked to drive independent Shell owners out of business. A positive outcome for the Massachusetts dealers could change franchise contracts for thousands of other U.S. Shell dealers.
Shell attorneys countered that the measures were simply a result of business realities, not a strategy designed to hurt independent dealers.
The dealers’ attorney disagreed, stating his belief that Shell makes significantly larger profits when selling fuel through a company-owned outlet. He added that by raising wholesale prices charged to dealers, Shell forced the dealers to raise street prices or reduce their margin to stay competitive. Either way, he said, revenues were diminished to the point where owners could not keep up with normal business expenses. Ultimately, the dealers believe that Shell wanted to reclaim the neighborhood stations well below fair market value.
Shells attorneys fired back, stating that the price dealers were charged for fuel was in the range of what dealers across the country were paying at that time.

Jury Rules for Massachusetts Franchisees in Shell Trial

DECEMBER, 2004 -- BOSTON -- A federal jury awarded more than $3 million to eight Massachusetts gas station operators after finding Shell Oil Co. used unreasonable tactics that were effectively intended to drive them out of business, reported the Boston Globe.
The decision, reached yesterday afternoon in U.S. District Court in Boston, was a victory for the Shell franchise operators, who filed a lawsuit four years ago against Shell and affiliates of the Royal Dutch/Shell Group, arguing the companies raised wholesale prices for gasoline and rents on its station properties to levels that hampered their ability to compete for motorists' business. The suit said it was part of the company's plan to convert independent franchises into company-owned stores.
Nine jurors voted unanimously in favor of the gas-station operators, said their attorney, Gary Greenberg of Greenberg Traurig in Boston. ''Our clients feel vindicated. Unfortunately, some of them lost their businesses and have suffered greatly over the last several years," he said. ''A couple of these people worked for years, or took $100 or $200 a week in salary to survive as a neighborhood gas station" under their agreements with Shell.
The case was also important to the world's third-largest oil company, which has agreements with thousands of franchisees nationwide.
The jury awarded $3.3 million in compensatory damages. That total does not include interest, attorney's fees or possible punitive or other damages that may be awarded by the judge, Greenberg said.
Station franchisees argued in court that the company's actions reduced the number of independent Shell gas stations in Massachusetts to fewer than 100 in early 2003, from 177 five years earlier. The dealers took issue with the wholesale prices at which Shell sold its gasoline to them for resale to drivers. They said the high prices would either squeeze their profits or force them to raise prices to levels that could be undercut by other stations.
The jury voted yes to the question of whether Shell ''in bad faith" set wholesale gasoline prices ''that were not commercially reasonable," court documents said.
Lease agreements between franchisees and Shell, which owns the properties upon which the gas pumps sit, were also at issue in the trial which started in mid-November. Shell in 1999 and 2000 phased out rental subsidies, a decision the jury said was a breach of its lease agreements with station operators. Jurors decided that the elimination of the subsidies amounts to a ''termination of the franchises" under federal marketing laws. Shell violated the Petroleum Marketing Practices Act when it eliminated its rent subsidy program, an act which constituted constructive termination of the franchise agreements.

Court Bars Shell FromTerminating Dealer For Poor Image Scores
A federal judge says Shell cannot terminate a Maryland dealer's franchise because of two bad image scores.
U.S. District Judge Peter Messite issued a preliminary injunction halting the ouster of dealer Mohammad Anvari after hearing, among other things, how a rep had hinted at repercussions if the retailer failed to follow Shell's pricing policy at the pump.
Anvari bought the station in 1985 for $285,000, becoming a Shell dealer in the late 1980s. The station is also 35 years old. Neither Shell nor its East Coast marketing arm Motiva has made any major improvements, and Anvari claims they have failed to do basic station repair and maintenance work required by contract. (sound familiar)
Nevertheless, Anvari has done his best to keep the station in good shape, he says in his lawsuit. His seven employees do regular cleanup and maintenance, and he has an outside firm to clean the restrooms, concrete and parking lot, and deal with the lawn and landscape.
His efforts were apparently successful, Anvari was named a "Flagship Dealer" by Shell in 1995, and the station regularly passed inspections until October 1998. He also managed to increase average monthly volumes at the site from 2002 to 2004.
According to Anvari's suit, since at least 1998 Shell has used a system of zone pricing as "a profit-maximizing device" to control and manipulate retailer pump prices. Anvari repeatedly refused instructions from Shell rep Ron E. Woodfolk to price within 2cts/gal of a competing station. Woodfolk "expressed irritation," commenting more than once that just because Anvari had been at the site for 20 years "doesn't mean we can't throw you out."
Then, last year, Shell introduced a new program dubbed the "Customer Value Proposition." According to a letter to dealers from retail VP Russell Caplan, CVP was aimed at increasing "customer satisfaction, brand
loyalty and business performance."

Along with the new program came a new kind of image form that was designed in a way that allowed the evaluator to achieve "subjective, arbitrary and discriminatory results," Anvari says.
For example, the evaluator could subtract the total points assigned to an inspection category for minor, insignificant conditions.
Shell set up the CVP program as "a tool for ridding itself of unwanted dealers" in circumvention of the Petroleum Marketing Practices Act so that it could establish a network of multi-location "master" operators, the suit claims.
In 2003, Shell set the `pass' bar at 70%, then raised it to 75% in 2004. In June this year, Woodfolk gave Anvari a score of 61% and in August said it was terminating him for failing to main minimum threshold scores on two consecutive inspections.
However, the termination notice when it arrived did not cite any provision of the 2003 franchise that Anvari had breached, only that he had failed to comply with provisions that were "reasonable and of material significance" to the franchise.
Dealer attorney Harry Storm, who represents Anvari, says Shell can't show that his client failed to comply with any provision of the franchise, or failed to make good-faith efforts to comply.
The CVP program upon which Shell is relying for its actions is an illegal and unenforceable promotion under Maryland law, Storm maintains. And, when coupled with Shell's zone pricing strategy, turns Anvari into a commissioned agent in violation of state divorcement law.
Shell declines to comment on the specifics of the case, Mard Enterprises Inc. v. Motiva Enterprises.
The company says its CVP program focuses on top consumer requests, such as properly working equipment, clean and well-maintained surroundings, and friendly staff. Motiva makes extensive efforts to help its wholesalers, retailers, and operators achieve the minimum CVP standards at its Shell-branded stations.

Russian Revolution, American Revolution
Dec, 2004
Lukoil rebranding nears in Northeast

MOSCOW -- Early next year Lukoil will start hoisting its red-and-white banners over its Mobil outlets in the Northeast, according to a report in the December 13 issue of Forbes.

Disc jockeys, trampolines, balloons, giveaways, direct mailings and credit card applications will herald Lukoil’s rebranding of the sites. Part of its $30 million marketing budget will be spent at sporting events. “We had hoped to advertise with the Philadelphia Flyers and the New Jersey Devils,” said Vincent De Laurentis, Getty’s executive vice president and COO, by embedding the Lukoil logo into the ice. But with hockey suspended this year, “maybe we’ll try basketball,” he said.

Once the Mobil stations are rebranded, some of its Getty stations will also get a new look. “Our stations will be rebranded and brought up to Lukoil’s international standards,” said Vagit Alekperov, head of Lukoil, owner of 2,100 stations from Maine to Virginia.

In Russia, the Lukoil brand is known and trusted, said the report. Until recently, the company dyed its gasoline red or blue to distinguish it from counterfeit fuels. But in the United States, Lukoil’s first battle will be to persuade consumers that their favorite station has not been taken over by an outfit pumping petrol of questionable provenance.

Alekperov is known as "the quiet oligarch," but there is nothing quiet about his ambitions. "The seven sisters should look out because they now have a brother," he said almost ten years ago. Lukoil has grown fourfold since Alekperov, a former Soviet oil minister, created it by consolidating state oil rights in the chaotic days after the collapse of the Soviet Union. He has not yet achieved his goal of turning Lukoil into a globally integrated oil giant, but he does have the makings. Lukoil has 20 billion barrels of proven hydrocarbon reserves, more than any other oil company except ExxonMobil.

Oil prices to slide in 2005

Dec., 2004 Oil prices will decline in 2005 and average $39 a barrel for the year because of reduced demand and increased supplies of crude from Russia and the Organization of Petroleum Exporting Countries, says a News survey.
New York oil futures will average $43 a barrel in the first quarter, according to the median forecast among 24 analysts. Oil has averaged $41.39 this year, up $10 compared with 2003 and the highest in 21 years.
"In the second half of the year slower demand growth and growing non-OPEC supply will coincide," said Antonio Szabo, chief executive of consultant Stone Bond Technologies.

January 2005 Changes

C-Store Compliance Reminder- It has been almost eight years since the initial decision by the Uniform Code Council to require bar code readers to scan 13-digit bar codes rather than the 12-digit code used in the United States and Canada. That decision referred to as the “2005 Sunrise rule” becomes effective January 1, 2005. Retailers should have made all the necessary changes to comply with this requirement. If you have not upgraded you may find that new products shipped from your suppliers may bear a 13-digit code that can’t be read by your equipment. There is not any punitive language should you have not upgraded your equipment you just won’t be able to scan all products. Just to brighten the discussion further there is an effort underway to see that scanning equipment can read the 14-digit Global Trade Item code.

Minimum Wage- It’s been more than a month since the citizens of the state amended our constitution by passing the “Minimum Wage Amendment”. The language in the amendment takes the minimum wage in Florida to $6.15 per hour (tipped employees to $3.13 per hour) and further provides for automatic increases each year tied to inflation adjustments. Whether or not you supported the move you need to understand that a little less than 3% of the wage earners in the state were at the federal wage guideline of $5.15 per hour. Implementation of the amendment begins six months after the amendment was enacted. That means you need to be in compliance effective in May of 2005.

Florida ranks 5th in identity theft

Attorney General Charlie Crist said he wanted to warn shoppers to be aware of thieves trying to get their personal information. Identity thieves are now using camera phones to snap pictures of credit card numbers and computer screens, he said.

FTC Asks Court to Halt Illegal Camco Operation:

Company Uses Threats, Lies, and Intimidation to Collect “Debts” Consumers Do Not Owe.

In the face of more than 2,000 consumer complaints, the FTC has asked a U.S. District court to order a halt to the harassing, intimidating, deceptive, and illegal ‘debt collection’ practices of RM Financial, Capital Acquisitions & Management (CAMCO). At the agency’s request, the court has frozen the assets of the company and its principals and appointed a receiver to oversee the corporate records and assets, pending trial. The FTC will seek a permanent halt to the illegal threats and lies the defendants use to attempt to collect “time-barred” debts and debts so old that they are beyond the statute of limitations, and cannot appear on credit reports and debts consumers never incurred and did not owe.

In March 2004, the FTC charged that CAMCO, , and their principals were threatening and harassing thousands of consumers to get them to pay old, unenforceable debts or debts they did not owe. The agency alleged that their abusive and deceptive collection practices violated federal law, including the Fair Debt Collection Practices Act. The companies and individuals paid a $300,000 civil penalty to settle the FTC charges, and were barred from engaging in abusive, deceptive, and illegal collection practices in the future.

In papers filed with the court, the agency charged that as much as 80 percent of the money CAMCO collects comes from consumers who never owed the original debt in the first place. Many consumers pay the money to get CAMCO to stop threatening and harassing them, their families, their friends, and their co-workers.

According to the FTC, grossly abusive behavior, including shouting and profanity, are commonplace tactics with CAMCO. Collectors told consumers:

We’re going to hound you ‘til the day you die; we will continue to hunt you; andwe’ll get you one way or another.

How Wal-Mart Is Destroying America
And What You Can Do About It

by Bill Quinn Ten Speed Press, 1998
P.O. Box 7123
Berkeley, CA94707
111 pages, $10 paperback

How Wal-Mart is Destroying America is a folksy, rollick-ing, slightly rumpled romp on the toes of the retail leviathan the author calls "my pet hate."

Bill Quinn is a retired (at age 84) small-town Texas newspaperman. The "America" in the title of Quinn’s book is small-town America, and he’s most exercised about the effect Wal-Mart has there.

But if you live in the city, or even in a town large enough to support a Wal-Mart, another big discount chain or two, and a few scattered small-retail survivors, you still need to read this book. It’s a splendid, accessible primer on the workings of savage capitalism and the reality behind America’s current biggest export: the mythical wonders of the free market.