|
Divided dealers Local gasoline dealers who once spoke out in agreement that the state should protect them from going out of business, now stand divided.
Big gas companies are taking over local
dealerships, doubling rents and putting
neighborhood owners out of business.
Some owners say that's fine with them.By Tim Ruel
truel@starbulletin.comSome dealers support state regulation to keep gas dealerships from being replaced by stations that are run by the oil companies. This trend, they say, gives the oil companies a vertical monopoly on the entire production, distribution and retail sale of gas.
"Your local neighborhood service station is fast becoming extinct," Arco dealer Andy Pung said in recent written testimony to the Legislature. Pung is wrapped up in a complex lawsuit against the Dallas owner of his gas station, U.S. Restaurant Properties Inc., which is trying to sell the stations to Lex Brodie's.
Pung's testimony was in support of a measure that would shorten the time an oil company can take over and run a dealer-operated station before having to find another dealer to run the station.
The debate is part of a larger argument among legislators, oil companies, independent gas dealers and industry analysts over how -- or whether it is possible -- to lower Hawaii's highest-in-the-nation gas prices.
|
Shell dealer Bill Green and Chevron dealers Bob Swartz and Barney Robinson have recently attacked government regulation as the problem, not the solution, when it comes to Hawaii's high gas prices.Green and Robinson acknowledge that in 1997 they supported state regulation that made it more difficult for oil companies to replace dealerships. Things were different then, they said. Chevron had just announced a new nationwide rent program that would raise rents on the neighbor islands because of its structure.
Since then, Green and Robinson say they have seen the light. The law has done nothing to help dealers, and has only discouraged oil companies from investing in new stations in Hawaii, they said.
"Nobody guaranteed me a living," Robinson said in recent testimony at the state Legislature against measures that would bolster the 1997 law.
At least eight Shell dealers in Hawaii have gone out of business in the past few years, despite the 1997 law, partly because the dealers face a steep escalation in rent. Green said his monthly rent at Kahala Shell is going from $12,000 to $25,000, which will probably put him out of business. Still, he believes that government shouldn't get involved.
Swartz said the oil companies have a responsibility to their stockholders first.
However, dealers have other reasons not to speak out against the oil companies, which serve as their landlord and sole supplier of product, said former Chevron dealer Frank Young.
In 1997, Chevron marketing officials made a pointed effort of encouraging dealers to oppose Young and Alvin Makimoto, who were speaking out in support of regulation, according to sworn court statements made by David Young, former public affairs manager for Chevron in Hawaii. The move was only partly successful, he testified.
David Young left Chevron in 1998, and now works for the state. His testimony was recorded during the fact-finding process of Chevron's 1999 suit to evict Frank Young from his Kakaako dealership. David Young and Frank Young are not related.
Makimoto said he has since changed his position because the market here has changed. Costco has started selling mass quantities of gas, and the consumer does not benefit from the mere protection of dealers, he said.
"For the sake of the consumer, we cannot say dealers are the better way to go for everybody," Makimoto said.
Chevron spokesman Albert Chee dismisses Dave Young's comments but would not say whether Young was lying. "That's before my time," Chee said.
Robinson and Swartz say they never received special treatment from the oil companies in exchange for their views on legislation.
Chevron does speak with dealers to get their point of view on issues such as regulation, Chee said. It's only natural that the company would align itself with like minds, Chee said. "That's human behavior you're talking about," Chee said.
"We treat all our dealers the same," he added. "If the dealers are split, they're split on the basis of their own decisions."
Some people have noted that Shell renovated Green's Kahala station recently, but it took seven years and Green has invested half a million dollars on equipment, he said.
Robinson and Swartz said their tenure as Chevron dealers has been less than perfect. Both have operated their stations outside of their specified hours -- one of the accusations Chevron leveled against Frank Young.
Robinson and Swartz said they have corrected their actions immediately.
"Frank was given the benefit of the ample time to correct it," Chee said. "If he just went and corrected it, it probably would have been OK. He chose not to correct it."
Frank Young walked away from his Kakaako station in January as a part of a confidential settlement with Chevron.