ExxonMobil Opposes Below-Cost Bill

RICHMOND, Va. -- Exxon Mobil Corp., the nation's largest oil company, is throwing its weight in the Virginia below-cost showdown challenging lawmakers and pitting convenience store chains and petroleum marketers against one another, CSNews Online has learned.

The Irving, Texas-based chain has contacted state lawmakers, urging them to oppose a bill that would prevent retailers from selling gasoline below their wholesale cost. The bill has attracted extensive attention as the heads of the Virginia Petroleum Marketers & Convenience Store Association and c-store chain Sheetz Inc. engage in vitriolic debate.

ExxonMobil, joining Sheetz's president Stanton Sheetz in opposition to the measure, contacted stated Senators in late January, encouraging them to oppose Senate Bill 458. The lobbying effort apparently failed as the state Senate approved the bill 23 to 12.

ExxonMobil, which operates some 4,000 convenience stores, reportedly is now directing its energies toward the House, where the bill sits in committee and will likely be voted on later this month. There, it faces the aggressive lobbying campaign engineered by Michael O'Connor, president of the state's petroleum marketing association and enthusiastic supporter of the bill. The association contends that non-traditional operators as well as some c-store chains are spearheading a machete attack on prices, virtually eliminating profit margins and putting an untold number of retail operators out of business.

ExxonMobil disagrees with the association's position. "It has been ExxonMobil's longstanding position to oppose legislation that attempts to artificially impose retail or wholesale price constraints," wrote J. Donald Turk, spokesman in the company's downstream public affairs office in the Southeast region. "We view these 'fixes' as unwarranted and unnecessary intrusions on the operation of free markets. Legislation of this type distorts market behavior and results in the inefficient delivery of products to consumers.

"ExxonMobil is acutely aware of the realities of the highly and increasingly competitive marketplace as experienced by its branded dealers and distributors," he continued, alluding to the rise of high-volume gasoline retailers undercutting street margins. "We understand the operating demands of the business and we work closely with our dealers and distributors to find practical business solutions, rather than legislative fixes to meet our mutual long-term objectives."

Turk said the oil giant does support federal law prohibiting predatory pricing, in which a company consciously undercuts prices to put others out of business. But he distinguishes between predatory pricing and what he describes as "anti-consumer legislation that restricts free and open competition."

He concludes in the one-page letter, "The government-mandated pricing controls proposed in SB 458 would adversely affect competition in the free market to the detriment of consumers in the Commonwealth."