Manchin Vs. Marathon

W.Va. governor criticizes oil company's decision to withhold indy gasoline deliveries

By 
Greg Lindenberg, Editor, CSP

CHARLESTON, W.Va. -- West Virginia Governor Joe Manchin released a statement late last week about a decision by Marathon Oil Corp. to temporarily stop deliveries of fuel to its Charleston distribution center that ordinarily would be sold to independent, nonbranded gas stations. "I am totally disappointed in Marathon's decision not to provide deliveries to their independent customers, especially considering our emergency situation with the recent flooding in our state," Manchin said.

Marathon officials told the governor their decision was made in light of anti-price-gouging [image-nocss] laws that were triggered by the governor's May 9 declaration of a state of emergency in flood-affected southern West Virginia counties and the contiguous counties. When a state of emergency is declared, anti-price-gouging laws automatically take effect for any areas contained within the declaration. Two major distribution centers for Marathon are in Kanawha County, which was included in the emergency declaration.

"When these declarations are made, they automatically trigger the state's pricing laws," Marathon spokesperson Angelia Graves told CSP Daily News. We take compliance with the laws of West Virginia seriously. Price controls, like this law, negatively impact supply by discouraging additional supply from being brought into the area. During this time, we have continued to fulfill all of our contractual obligations in the state. In fact, we continued to supply over 90% of the normal base. I believe the governor is referring to independent wholesale customers in his statement, customers who choose to operate without supply contracts. As a result, when supply is tight or other situations arise such as states of emergency, independent customers who do not have a contract with us may have to look others places for product."

The anti-price-gouging laws allow businesses to increase prices to recoup costs if the increase is directly attributable to additional costs imposed on the business, the governor's statement said.

"Now is the time they should be stepping up to help their customers and our citizens through difficult times," the governor said. "We believe they are still able to operate within any restrictions imposed by the price-gouging laws, and it's just a shame that they can't help their neighbors and look beyond that for the short time the declaration remains in effect."

Graves said, "We did have several discussions with the administration beginning over two weeks ago asking for assistance in clarifying the emergency declaration for Kanawha County where our terminal is located since it was indicated that this county was not impacted by the flooding. The governor has the authority to lift or limit the price controls which would have encouraged more product flow into the area by letting the market respond normally; however, the administration chose not to do so. Fuel prices have been moving up in the past few weeks and the price controls in place prevents Marathon from replacing the product at the current market price."

She added, "We can't raise our rack price above the 10% threshold that West Virginia has set in their laws during a declared emergency. We can't raise our rack price to reflect the current cost of product in the market, so it isn't prudent to continue to supply a customer that doesn't have a contract at a price that is below the market price."

This decision by Marathon could affect up to 9% of the company's customer base in the greater Charleston area, the statement said. Branded stations (Speedway, Marathon) are not affected by this stoppage. For the time being, independent dealers will be forced to drive to other distribution centers outside the state or in other parts of the state not within the emergency declaration, said the statement.