Fuel Dealers Refuse to Quit

Gasoline dealers in New Jersey have won a string of major victories in their race to stave off what they predict will be dire consequences stemming from Exxon Mobil Corp.’s large-scale pullout from parts of the Northeast.

Dealer groups have succeeded in pushing legislation through both the state Senate and Assembly in hopes of getting a final bill on Gov. Jon Corzine’s desk by the end of April or early May.

The Senate Commerce Committee took up the bill at the beginning of March, and approved it by a vote of 4-0. It subsequently went to the full state senate for a floor vote on March 16 and passed 29-3.

Days earlier, the bill was approved 7-2 by the state Assembly’s Transportation Committee. To become law, it must now go before the full State Assembly and, if passed, be signed by Gov. Corzine. Given the strong support the bill received by the state Senate and Assembly, dealers are optimistic of their eventual success.

Moving to the Right
At the heart of the issue for New Jersey dealers is ExxonMobil’s plan to sell more than 2,000 stations to the highest bidders, which some warn would reduce local ownership and force operators to raise prices to pay for acquisition costs. The dealers operating the facilities were clear they want to stay branded with Exxon, but they are seeking the right of first refusal on any sales.

ExxonMobil said last June that it was planning to transition from direct-serve to distributor-owned-and-operated stations. Since then, it has begun selling off its properties to other gasoline providers. According to spokesperson Beth Snyder, ExxonMobil intends to unload 820 corporate-owned stations and 1,400 dealer-operated outlets to major gasoline distributors in New England, New York, New Jersey and Virginia.

The strategy stems from the 1999 ExxonMobil merger and plans to resolve an antitrust issue. The Federal Trade Commission (FTC) accepted the $87-billion merger of Exxon and Mobil with the proviso that the combined entity sell roughly 2,000 of its 14,000 stations nationwide and pull out of its branded stations in New England.    

To date, only Washington, California and Connecticut have laws on the books like that being sought in New Jersey. “Connecticut’s version of it doesn’t have teeth,” said Sal Risalvato, executive director of the New Jersey Gasoline, Convenience Store and Automotive Association (NJGCA) in Springfield, N.J. Maryland, he added, is currently following the same path as New Jersey, “but they haven’t gotten it passed through any committees yet.”

Maryland dealers have been just as active in pushing similar legislation. A newspaper advertisement across the state signed by “local Exxon and Shell dealers” recently urged people to support state Senate and House bills that would prohibit a gasoline producer or refiner from transferring or assigning an interest in a gas station without offering a right of first refusal to the dealer who leases the premises.

Across the river from New Jersey in New York, a similar bill was introduced but has yet to be assigned to a committee.

Insiders expect other oil companies to follow ExxonMobil’s lead in selling off properties. “Right now the two companies that have deals imminent are ExxonMobil and Shell,” Risalvato said. “But I am positive that it won’t be long before Lukoil and Sunoco are doing the same.”

Shell, Risalvato added, “hasn’t said it publicly, but it’s been doing it very, very quietly. They’ve been under the radar for about a year.”

Sweet Victory

Passage in the New Jersey State Senate was “a sweet victory for us,” Risalvato said. “This has been a major focus for the last few months. I’m really proud of the dealers here in New Jersey. They showed up in great numbers to both committee hearings and then for the vote on the senate floor. We had well over 100 dealers in Trenton altogether.”

When the Senate Commerce Committee voted, Risalvato said, “our people filled the room. It was standing room only and right out the door. When the Assembly Transportation Committee heard it the room was even bigger and we filled it as well. We had dealers outside of the democrat caucus room, the republican caucus room, filling the gallery and the front entrance to the senate chambers.”

No one can say when the assembly will take up the issue. Its members are busy grappling with budgetary issues that thus far seem to be pushing everything else to the back burner. In the mean time, Risalvato said, the state’s dealers are “firming up our position on the importance for this legislation with members of the assembly. We are hoping it will be heard and voted on on the floor in early to mid-May.”

As for Gov. Corzine, Risalvato is a little less unsure. “We do not have any indications yet on how he’d vote. We are now going to work on him,” he said.

Risalvato preferred not to say how he would proceed should Corzine fail to sign the legislation when and if it is presented to him. “We are pursuing legal remedies along with legislations remedies, but I would not want to speculate what my actions would be if the bill were to be put on the governor’s desk and he wouldn’t sign it,” he said.

Time, Economy Concerns
Levent Sertbas, an operator of a pair of ExxonMobil stations with On the Run convenience stores in Paramus and East Rutherford, N.J., said he and his fellow dealers are trying to do it as quickly as possible.

“We are in a race against time,” Sertbas said. “ExxonMobil is moving too fast, and we don’t want to be left out. All we need is the assembly to vote, and then Gov. Corzine to sign it. The biggest problem we have now is the budget talks that are ongoing in both the assembly and the senate so we don’t know if we’re going to be able to put the bill forward any time soon.”

Sertbas said he would like to purchase at least one of his locations should the legislation pass, but added the economy and access to credit could make that a little difficult.

“At the moment, I’m very disappointed that we weren’t able to get the bill heard and voted on in the full assembly,” said Eddie Ashabi, who, like Sertbas operates a pair of ExxonMobil stations (in Ramsey and Newfoundland, N.J.) and serves as president of the United Dealers of New Jersey (UDNJ), a group of about 70 ExxonMobil dealers with more than 100 locations, which was formed to fight for this legislation. He estimates that it might not reach the docket until the end of May or early June. “Unfortunately, that gives an opportunity to ExxonMobil or Shell to sign contracts with buyers.”

That eventuality, Ashabi conceded, could render all of his group’s efforts moot. He remains philosophical. “We may not be able to benefit from this bill when it becomes law, but definitely it will have an impact on the future business deals that are going to happen in this state,” he said. “California and Washington have had this law for over 20 years. Unfortunately, New Jersey is way behind when it comes to protecting the small business owner.”

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