Retailers Allege Foul Play

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Retailers Allege Foul Play

SEATTLE -- More than 50 Texaco station owners in Washington and Oregon have opened a legal battle with Shell Oil, saying the company is withholding key details of agreements that could allow them to break free and buy gas from another supplier.

The dispute, the largest between dealers and suppliers in more than a decade, could determine the fate of a number of family-owned businesses -- and the choices consumers have at the pump, The Seattle Times reported.

Shell has offered owners new contracts to sell them gas over the next 10 years, but most station owners are refusing to sign, saying they'd be required to operate around the clock, fined for missing sales quotas and impeded from passing stations on to their children.

Shell got the right to supply the group of independent Texaco dealers as a condition of Texaco's merger with Chevron earlier this year. Sean Edwards, Shell's retail sales manager for Washington, confirmed that most of the station owners haven't signed the new agreements, but won't say how many. "Some have signed," he said. "But progress isn't what we thought it would be."

Shell says it's entitled to collect penalties if the dealers switch to a new supplier. But the dealers' lawyer, Mike Vaska, says they may have a way out. As part of the Texaco-Chevron merger, the Federal Trade Commission and several states set terms under a consent decree that Vaska says requires Chevron, under certain circumstances, to reimburse dealers for penalties they incur for switching from Shell to other suppliers after June 30, the report said.

Vaska says he wrote to Shell's general counsel in Houston requesting information about the consent decree last month but hasn't gotten a response. He said that date could explain why Shell has pushed dealers hard to sign quickly, giving them 60 days from the time the contracts were handed out in February.

"Right now, Shell is playing a game of cat-and-mouse with the facts, to the detriment of these small independent dealers," Vaska said.

Edwards, the Shell representative, says the company is drawing up a response to the legal challenge, but he didn't know what it would be.