Merrimack Valley

Bill attacks Big Oil ban on discounts for cash at the pump

By Edward Mason
Staff writer
Published: July 21, 2008

BOSTON — Drivers socked at the pump when they fill up at Mobil, Sunoco and other brand-name gas stations could get at least a few cents of relief this summer.

Rep. Barbara L'Italien wants to force the oil companies to let their franchise owners offer discounts to customers who pay cash for gas. She has filed legislation, similar to a law recently enacted in Connecticut, that would cancel any agreements between the oil companies and the gas stations forbidding cash discounts.

The Andover Democrat estimates the discounts could save drivers up to 7 cents a gallon — real savings as gas prices soar.

"It could greatly impact the price paid by consumers," L'Italien said. Her district includes precincts in Andover, Boxford, Georgetown, Haverhill, Methuen and North Andover.

L'Italien says her plan would help drivers by expanding the number of gas stations that can discount their gas.

Independent stations already offer cash discounts. But stations leased from major oil companies oftentimes cannot.

Already, L'Italien's constituents are driving out of their way to find "no-name" stations to save money. Her bill will give drivers more choices.

"I know people are going out of their way to see where the cheap gas is," L'Italien said. "People are willing to change their driving habits if they can save money."

L'Italien's proposal comes as drivers are suffering through an expensive driving season. Regular unleaded averages $4.09 statewide, according to the state Division of Energy Resources.

Stephen Curtin, owner of Shawsheen Sunoco in Andover, sells regular unleaded for $4.09 a gallon, and premium for 30 cents a gallon more. His Sunoco contract bars him from selling gas for less to cash customers.

He said people would save at his pumps under L'Italien's plan.

"If I can offer gas for 5 or 6 cents less," Curtin said, "everybody's happy."

Oil companies may not be so happy. They often bar discounting cash sales because it cuts into credit card sales. They collect a 2.5 percent transaction fee on credit cards they issue to customers. Because the fee is a share of the final sale, oil companies have experienced a double windfall, getting paid for gas and a transaction fee.

"They're making record profits," L'Italien said. "I'm not worried about them."

She is worried about people like Curtin, who said tens of thousands of dollars a year in credit card fees have made selling gas unprofitable.

"I'm just a little guy, a two-pump family-run station," Curtin said. "I used to make money on gas. Now we break even."

A Sunoco spokesman did not return a call for comment.

Bill backer Sen. Steven Baddour, chairman of the Senate Transportation Committee, said what the oil companies think shouldn't concern the Legislature.

"The only groups I can imagine would be opposed are the Exxon-Mobils of the world," said Baddour, D-Methuen. "And I don't really care about their view right now."

Curtin is a member of the New England Service Station and Auto Repair Association, which supports the bill.

It also has Republican backing from Sen. Bruce Tarr of Gloucester and Rep. Bradford Hill of Ipswich.

L'Italien's measure is the latest attempt to offer drivers relief from soaring gas prices. Earlier this year, Massachusetts Republicans unsuccessfully pushed for a suspension of the 21-cent-per-gallon state gas tax this summer.

Democrats and Beacon Hill watchdogs slammed that proposal because it would hit a source of revenue for critically needed road and bridge repair.

By changing the contracts between oil companies and gas stations, L'Italien preserves that money for road work while cutting prices.

Time is short for getting L'Italien's bill passed. The Legislature's formal session ends July 31. After that, any measure can be defeated by a single 'no' vote. L'Italien, though, believes it can get done.

"Things here can happen in a day if they want it to," L'Italien said.