SENATE BILL REPORT

SB 5674

BYSenators Peterson, Bauer, Owen, DeJarnatt, Conner and Bottiger

Prohibiting a motor fuel supplier from operating retail outlets.

Senate Committee on Transportation

Senate Hearing Date(s):March 3, 1987

Senate Staff:Brad Lovaas (786-7307)

AS OF MARCH 3, 1987

BACKGROUND:

In 1982 there were 226,500 retail service stations compared to the 120,000 stations which existed in 1986, according to the U.S. Department of Commerce.  This marketing shakeout has eliminated 102,000 conventional stations (full-serve, self-serve, service bays) from the marketplace.  In their place, new or remodeled units have appeared.  These new units, most of which are pumpers (gas only), are capable of doing from 100,000 to 500,000 gallons a month or more, or two to ten times the average of the conventional station.

There are approximately 3,000 gas stations in this state, of which 128 are major refiner company operated stations.  There are approximately 1,200 independent dealers, and 1,700 jobber operated outlets statewide.

There are two types of independent gasoline retailer:  1) a lessee dealer operates under a lease or franchise and supply contract with a refiner, and 2) an open dealer who owns the premises or leases them from a third party, but obtains gasoline from a refiner through a supply contract.

Throughout the study period, the major refiners-suppliers maintained that the restricting of the marketplace was due to market forces which are taking place following more than seven years of federal regulation.  These market forces include a more streamlined approach to marketing gas and the public's acceptance of self-serve gasoline stations.

SUMMARY:

A motor fuel refiner-supplier is defined as one who refines crude oil into gasoline and has an operable refinery capacity of 325,000 barrels a day, as reported to the federal Department of Energy.

After December 31, 1987, no motor fuel refiner-supplier may open and operate a retail outlet with company personnel, a subsidiary company, a commissioned agent, or person or firm under a contract or fee arrangement.  The retail outlets must be operated by a motor fuel retailer.

After June 30, 1989, no motor fuel supplier may operate any retail outlet with company personnel, a subsidiary company, a commissioned agent, or person or firm under a contract or fee arrangement.  The retail outlets must be operated by a motor fuel retailer.

Fiscal Note:      none requested