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June 15, 1978 - Image 5

Resource type:
Michigan Daily, 1978-06-15

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Court lets
WASHINGTON (AP) - States may
prohibit oil companies from operating
retail gasoline service stations and also
may impose restrictions on gasoline
wholesaling policies, the Supreme
Court ruled yesterday.
Saying that such laws do not interfere
with interstate commerce, the court
upheld a Maryland law passed in the
wake of the gasoline shortages of 1973.
MOST STATES have considered
following Maryland's lead. If they do,
oil companies could face significant
changes in the way they do business on
the retail level.
It was far from clear, however, what
result yesterday's decision will have for
consumers. "We honestly don't know
what it will mean for prices at the pum-
ps," said Marvin Bond, assistant to
Maryland's comptroller of the curren-
However, Maryland Attorney
Oil expert
says ruling
won't have
much effect
NEW YORK (AP) - A respected oil
industry analyst yesterday said a
Supreme Court ruling allowing states to
bar oil firms from running gasoline
stations may have little effect on prices
at the gas pump.
The 7-1 ruling was issued yesterday,
and it came as a disappointment for
some oil companies.
DAN LUNDBERG, publisher of the
Los Angeles-based Lundberg Letter,
said, "there may be some momentary
turbulence in prices" as the oil com-
panies get rid of their few stations, but
the ruling "struck out more at the in-
dependent businessman than at the oil
He said the big losers may be small
independent stations which face the
harshest competition not from oil com-
panies but from large-volume chain
Industry sources added that some of
the most intense pressure on retail
gasoline prices comes from these new
aggressive independents, which often
are self-service chains with few em-
THEY DON'T have the small
dealer's high lease costs, and their high
volume allows them to do hard
bargaining over wholesale prices.
-But according to Lundberg, small
dealerships still may be on the way out.
In the past six months, "there hasn't
been one conventional station built in
the United States," he said,
Expressions of disappointment came
from spokespersons for Phillips, Shell,
Exxon, and Continental. But Phillips
spokesman Dick Robinson said the
ruling's impact on Phillips may be
slight because the company owns only
400 of about 12,000 stations selling its
Shell owns and operates 80 or more
than 17,000 stations carrying its produc-
ts, Conoco 1,358 of about 6,500 stations,
Gulf 800 of nearly 18,000 outlets, and
Exxon about five per cent of 23,000

The Michigan Daily-Thursday, June 15, 1978-Page 5
states guide oil companies' prices
General Francis Burch said, "This will them, an arrangement most often used Maryland stations selling Exxon
mean much more competition in the by oil firms. premium the same break.
marketplace and ultimately.. . will THE HIGH court ruled that states
lead to lower gasoline prices." may require oil companies to make FLORIDA, Delaware and the District
Bond said the law was enacted to only "across-the-board" price reduc- of Columbia prohibit oil companies
prevent oil companies from disciplining tions within a state. That means a state from operating stations. Delaware,
independent dealers in Maryland by could tell a refiner or producer not to California, Rhode Island and the
controlling their, supplies during charge varying wholesale prices for its District of Columbia have enacted the
gasoline shortages. product. across-the-board pricing provision.
THE COURT'S vote to uphold In most states today, an oil company Yesterday's decision was written by
Maryland's law was 7-1. Justice Harry legally may give its retailers in certain Justice John Paul Stevens.
Blackmun dissented only from part of areas special price breaks to meet The Maryland law was challenged in
the decision, and Justice Lewis Powell competition or spark new business. In 1974, the same year it was enacted, by
did not participate in deciding the case. Maryland, all such price breaks have to Exxon, Phillips, Shell, Continental,
The decision means oil producers and be statewide. Kayo, Gulf, Commonwealth Oil and
refiners will have to cease operating For example, Exxon could not reduce Petroleum Marketing Corp.
some 250 stations in Maryland within the wholesale price of premium They charged that the law violated
the next year. gasoline for the Baltimore area only. If federal commerce laws and the Con-
Companies owning and operating it wanted to give Baltimore stations stitution's safeguards for interstate
those stations do not have to sell the selling Exxon premium gas a price commerce. The court flatly rejected
properties, but could choose to lease break, it would have to give all those arguments.

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