The deal paves the way
for a Texaco-Shell joint venture

Star-Bulletin staff

The state today announced an agreement that will result in either the Shell or Texaco brand names disappearing from island gasoline retailing and instead bring in a new competitor.

Attorney General Marjorie Bronster said Shell and Texaco agreed that one or the other will sell off its Oahu terminal and retail gasoline operations by November 1998.

The deal is part of a settlement with several Western states and the Federal Trade Commission that will allow the two parent gasoline giants, Shell Oil Co. and Texaco Inc., to create a $17 billion joint venture of West Coast and Hawaii gasoline operations.

One Oahu service station operator, Bill Green of Kahala Shell Auto Care Inc., said the deal could be "totally devastating" to the local dealerships. He said as a result he could lose the lease on his outlet.

Green said the state attorney general's office has been unsuccessfully looking for years for something wrong in island gasoline distribution.

Bronster announced the 10-year consent decree, agreed to by Shell and Texaco and approved today by the FTC. Her office had threatened litigation against what it saw as the anti-competitive nature of the merger. California, Washington and Oregon joined in the action.

Shell and Texaco both have distribution terminals and dealerships on Oahu. Shell has 28 gasoline stations and Texaco 15 of its own stations and 13 operated by other retailers.

After the merger, one or the other will have to sell its terminal and retail system to a new entry in the market and they will have to make Maui and Big Island terminals available to others at reasonable rates, Bronster said.

Ted Clause, deputy attorney general, said the arrangement will bring more competition by paving the way for another supplier of gasoline in Hawaii.

If that supplier is able to purchase gas from a cheaper out-of-state source than the two local refiners, Chevron and BHP, then the competitive environment will be improved, he said.

"The trick is whether that new guy will be a competitor in a more vibrant way than there has been competition in the past," Clause said. He said he thinks that will happen.