Gas Price Archive
Spend your weekend working to make gasoline sexy
originally published May 25, 1997
Hello Mr. Editor? Interested in a bigtime scandal? You want what? Uhh...no, sorry. No sex, drugs or rock 'n' roll here. But billions of dollars are being stolen from little people. It's a ripoff everybody can relate to right at the gas pump. Yes, that's right, gas prices. What? The story's just not right for your readers? Well, thanks anyway for listening.
I had pretty much that conversation with newspaper and magazine editors all over the country last spring. The public was whistling mad about skyrocketing gasoline prices and nobody wanted to write the truth except two obscure small market newspaper columnists. (The other guy is now retired in the Pacific northwest.)
I never gave up trying to get somebody interested. Sonoma State University's venerable Project Censored, which prides itself as a years-ahead predictor of major news, did not see fit to include the petroleum octopus among its top 25 under-reported stories of 1996.
One 800-pound gorilla did respond: two-time Pulitzer Prize winner James Steele, half of the Philadelphia Inquirer's legendary investigative team. I met him when he lectured at UNR a few years ago. "I would very much like to see the work you have done on the oil companies," he wrote. "One of the first projects Don (Barlett) and I undertook as a team back in the early 1970s was a probe of the international oil industry...so this is a subject dear to our hearts."
Barlett and Steele recently moved to Time Magazine, so I have high hopes that they'll look into how BigOil rips us off every day. Before contacting Steele or Project Censored, I did a complete web search of the LA Times and San Francisco Chronicle. I was shocked that they totally ignored the heart of the story: the predatory, oligopolistic marketing schemes of the major oil companies, led by ARCO.
After more than a year of publishing oil company press releases, the mainstream media are finally starting to get parts of it right. The best recent example is veteran reporter Ed Koch's extensive articles in the May 14 Las Vegas Sun.
Regular Barbwire readers know the basic outline. In the 1980's, ARCO came up with an ingenious redlining scheme which has withstood most legal challenges and driven thousands of independent retailers out of business. BigOil thus need not conspire to fix prices. They need only look down the block at ARCO's signs in a given area.
They price their gas to retailers according to the physical location of that dealer within a gerrymandered pricing zone. The arbitrary boundaries make no sense unless analyzed in terms of forcing independent retailers to either go major brand or go under. The strategy is now common knowledge, just not sexy enough for prime time or the front page. ARCO's move was ordered in the infamous 1982 "smoking gun" memo. Under subpoena from the 1987 Nevada Legislature, the company omitted four critical pages. When Assemblyman Matthew Callister (D-Las Vegas) obtained a copy, he used it to push through Nevada's "divorcement law," prohibiting oil refiners from owning gas stations.
Juice lobbyist Harvey Whittemore (yeah, Harvey the gamblers' lawyer again), is busy down at the ledge even as you read this trying again to get that law repealed. Because of Nevada's super-high gas taxes, we don't realize that the divorcement law has given us prices lower than other states where ARCO operates unchecked. Our overall prices remain much higher than they need to be because of artificially inflated California prices.
Jack Greco, a gutsy Las Vegas ARCO dealer, got the divorcement law passed in 1987 and further succeeded in getting the story onto the front page of the Wall Street Journal in 1988. I used it on my talk radio show at the time and have been following up ever since.
Mr. Greco sent me an ARCO price comparison from three states. Last March 26 inPasco-Kennewick-Richland, Washington, ARCO gas sold for 46.1 cents per gallon before taxes. Just a few miles away in Yakima, ARCO sold for 26.9 cents per gallon more. Transportation cost was obviously not a factor. It's been about a penny a gallon in the west.
In Las Vegas on the same day, the price without tax was 77.8 cents; in Phoenix, 94.6 cents --- all for the same stuff, pumped through existing pipelines. Greco asserts that the reason for strikingly low Washington prices lies in the typical BigOil squeeze against small competitors in a targeted pricing zone. He points to an article in the March 30 Tri-City Herald wherein an ARCO representative stated that the company made a profit at 46.1 cents per gallon before taxes. Greco says only cut throat competition explains the wide price disparity for the same product.
"ARCO says it's only seeking value conscious customers," Herald reporter Don McManman wrote, "but others have a more sinister view. They see an insatiable corporate carnivore that devours competition, only then to jack up prices." Courageous Las Vegas Texaco and Exxon retailer John Arfuso told the 1995 Nevada legislature "there is a direct correlation between our suppliers' pricing strategy and ARCO's reported price. We constantly follow ARCO."
Eliminating the fiercest price competitors was the goal stated in the 1982 marketing memo. The "traditional two-tier major-independent market system (is) no longer able to co-exist," ARCO President J.S. Morrison wrote, concluding "REQUIREMENT: Head off loss of market control!!!" The price zone strategy was born. Independent gas stations began to disappear.
So, as you pay exorbitant gas prices this Memorial Day weekend, get mad.
Better yet, get even. Hit your Print button and send copies of this column to local officials. San Diego County supervisors recently introduced a local divorcement proposal. Pressure your legislator to fight ARCO's push to repeal Nevada's divorcement law. By banding together and raising hell, BigOil can be beaten. Much more soon.
HALF A MEA CULPA DEPT. My personal thanks for all the phone calls, letters and e-mail asking about my first absence from the Tribune since the Sunday edition began its weekly run about nine years ago. I e-mailed the May 11 Barbwire an hour past the Friday deadline. It was by no means the first time I've ever been late. This occasion resulted in the death penalty. My fault, and I'm sorry. (The same column got nuked again last Sunday, proving once again Barbano's cardinal rule of media placement: push the deadline and get attention, submit too early and get lost.)
I have emphatically made my feelings known that the paper owed its readers the courtesy of informing them. I unilaterally apologize for that oversight. The Lost Column is really a pretty good piece, available at the Nevadaweb address, below. It deals with the hypocrisy of some of the sponsors of the May 7 Reno Gazette-Journal full page ad for the Nevada Women's Fund. A good number of those benefactors have abominable records of stomping on womens' rights. Hard copies will be available for the cost of copying (about 15 cents) later this week at both Reno Office Depots and Nevada Instant Type in Sparks.
HUMAN RIGHTS WATCH TOO: The Nevada Workers Bill of Rights, AB 506, will be heard in the Nevada assembly labor committee this Thursday at 3:45 p.m. It was researched and proposed by Kathy Stoneburner, whose husband, Tom, heads the beleaguered security guards union. Last January, the Reno Hilton fired all its experienced security personnel and replaced them with low-wage temps. The Workers Bill would have significantly mitigated the damage downsizing did to more than 60 Nevada families. (Nationally, mass layoffs rose 83 percent in the last quarter over the third quarter of 1996.) Call 687-4848 (toll free 800-992-0973) and say you support AB 506. The bill has little chance of passage in full, but remember: great decisions begin as great dissents.
Be well. Raise hell.
© Andrew Barbano
Andrew Barbano is a member of Communications Workers of America Local 9413 and editor of U-News, where the past four years of columns may be accessed. Barbwire by Barbano has originated in the Daily Sparks Tribune since 1988.
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