TACOMA, Wash. -- Yellow caution tape circles the pump islands these days at Hatem Shalabi’s network of gas stations at 14 locations in Western Washington. The once-booming business is a victim of a dispute between convenience-store owner Shalabi and his supplier, Arco, that resulted in Arco cutting off his gasoline supply, according to a report in the News Tribune.
To Arco it was a simple disagreement, according to the report. Shalabi was behind in his payments for the fuel the company supplied to his stations. When he couldn’t pay the company quickly, it cut off the supply and told him he couldn’t buy from any other oil company.
But to the stations’ owner, the issue was much larger: He claims Arco was using its pricing power and its exclusive-fuel-supplier status to force him into a financial corner. His markup on gasoline was so little he couldn’t afford to keep operating profitably, he contends. Arco had gained that power when it sold the stations to him by deceiving him about the stations’ finances and their environmental status, he maintains.
If Arco had allowed him a larger margin between its wholesale price for gasoline and the prevailing retail price, his stations, which stretch from Redmond through Pierce County to Olympia, could have been decently profitable, he maintains. When Shalabi’s stations were fully supplied with fuel, they sold about 6 million gallons a month.
But now, after six months of increasingly contentious litigation with Arco and its parent, BP, Shalabi is barely hanging on. He claims that since he bought a string of stations in the Puget Sound area from Arco three years ago, he’s lost $8 million.
Neither Shalabi nor Arco show any signs of relenting in a court standoff over the stations’ fate. Since the News Tribune first reported on Shalabi’s disagreement with his big supplier last fall, that fight has spread from federal court in Western Washington to a state court in Southern California and to Superior Court in King County.
Dozens of other Arco dealers have attempted to join the federal suit on Shalabi’s side, and Arco has moved aggressively to cut off their former dealer’s alternative sources of fuel.
Shalabi, most of his assets lying fallow, says he isn’t interested in detente with Arco or BP.
“I will never buy another drop of gas from BP even if I have to spend my last cents to fight them,” he said recently.
Shalabi is trying to keep the station’s convenience stores open and his 140 or so employees working. But without the traffic that the gas sales create, his convenience store sales are down to 20% of their former volume, he said.
Click here to read the complete report from the News Tribune.
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