Gas prices spur push to ban zone pricing

Westchester County Business Journal, Sep 05, 2005 by Philippidis, Alex

Even with two service stations, Mike Innella says, record high gasoline prices have been anything but good for business.

Innella, owner of stations in Pelham and Bronxvile, says rising gas costs have squeezed independent dealers like him, as customers either fill up less often, or pay by credit card. Credit card fill ups cost him 7 cents per gallon, money that otherwise would have gone to him - on top of an annual fee of 3 percent of sales.

"The customers aren't filling up. They say give me $10 instead. We've seen a 20 percent cut in demand," said Innella. "We used to get 75 percent cash and 25 percent credit cards. Now, it's the other way around. It's costing me $100 a day just to process credit cards and that's right off the top. Westchester's 400 service stations charged an average $2.75 a gallon as of Aug. 17, up about 70 cents over the past six months, thanks to factors that include increased demand from China, terrorism-related spikes in crude oil prices and the shutdown of refineries in the Gulf Coast following Hurricane Katrina.

"We expect prices to go up on the next delivery (before Labor Day). I don't know if the impact of Katrina will be fully reflected, but by (the week of Sept. 5) we're going to see a jump of about 10 cents a gallon," said Elaine Price, the county's director of consumer protection.

If there's any silver lining, Innella added, it's that high gas prices have prompted elected officials to revisit banning wholesalers from charging more for gas in affluent areas within Westchester Innalla's Chester Heights Mobil station in Bronxville has charged a fluctuating number of cents a gallon more than his Pelmount Mobil station in Pelham because the former is in a different zone set by his supplier.

"In effect, they are regulating the prices and that's what I'm opposed to. My stations are the same size, same tax rate, same delivery cost. Why are they charging me in Bronxville more per gallon than I'm paying in my other station?"

A Mamaroneck-based industry group representing Innella and other independent service-station owners blames zone pricing with adding as much as a dime to the cost of a gallon of gas.

"As the gasoline prices go up, it's cutting into the profit margin," said Peter Kischak, president of the Service Station Dealers of Greater New York Inc.

The Mamaroneck-based dealers group late last month pressed its case at a meeting with Assemblyman Richard Brodsky (DGreenburgh). Brodsky has introduced an Assembly bill (A-3856) that bans "arbitrary price differences within the same market based on what consumers are likely to pay," with a $5,000 fine per instance of zone pricing. The bill has two local co-sponsors: Assemblymen Adam Bradley (D-White Plains) and George Latimer (D-Rye).

"With gas prices as high as they are, we want to do everything we can to take away artificial inflators and this (zone pricing) is one of them," Brodsky said last week.

Brodsky's bill sits in the Assembly's Economic Development Committee, while a companion state Senate bill (S-973) by James Alesi (R-Perinton) is in the Senate Rules Committee. Both bills are not expected to resurface for any discussion till at least next year, when the state Legislature resumes its regular session.

The two bills won support last May from the Westchester County Board of Legislators, which held hearings two years ago as it tried but failed to drum up support for the ban. Over the summer, county Legislator Michael Kaplowitz (D-Somers) went further, launching a campaign asking residents of Heritage Hills in Somers and members of the Yorktown Rotary to write letters to state representatives demanding the end of zone pricing.

"When you head up to Putnam, or down to (New York) City or out to Long Island, you're looking at a 5- to 10-cent difference compared to Westchester stations," Kaplowitz said. "In the old days you used to be able to drive down to (New York) City and you'd never buy gas down there because it was expensive. Now, in some cases, it's cheaper in New York City, which makes no sense. It clearly is a perversion of the marketplace and it should be outlawed."

Kaplowitz and Brodsky hope New York state can succeed where Connecticut Attorney General Richard Blumenthal failed last year His measure to ban zone pricing was defeated in Connecticut's legislature.

But Connecticut may revisit the issue soon. Gov. M. Jodi Rell, a Republican, expected to seek a full term next year, has publicly asked lawmakers to revisit the issue next year in hopes of lowering gas prices. Rell this past spring helped push those prices higher by shepherding a $1.3 billion gas-receipts tax intended to pay for transportation projects.

Cathy A. Kenny, associate director of the New York State Petroleum Council, a statewide group representing oil companies, said zone pricing is less a factor in pushing up gas prices than state and federal taxes, environmental regulations and higher trucking costs since 80 per-cent of New York's gas is trucked from New Jersey or elsewhere.