Exxon Mobil Corp., the biggest U.S. oil company, was sued by operators of more than 100 of its New Jersey gas stations claiming they are being forced to overpay for wholesale gasoline and rent.

The complaint, filed yesterday in federal court in Newark, New Jersey, claims Exxon Mobil manipulates the quantity and timing of fuel deliveries to overcharge franchisees. The company split the state in 100 different zones, charging varying prices for the same quality and grade of fuel, according to the complaint.

“Exxon has unlawfully utilized its control over virtually all aspects of plaintiffs’ stations in a manner that has threatened the continued viability of the stations as ongoing businesses,” according to the complaint.

Exxon Mobil last year posted the highest profit on record for any U.S. company. The Irving, Texas-based company intends to defend itself vigorously against the lawsuit, said spokesman Kevin Allexon.

“Exxon dealers are independent business people who set the retail price at the pump,” Allexon said yesterday in an e-mailed statement. “Exxon Mobil sets its wholesale price on a number of factors that are designed to allow our dealers to compete with competitors in their local trade area. Competitive conditions change rapidly, affecting price differences from one area to another and from one day to another.”

Manipulating Timing

The oil company is manipulating the timing of its fuel deliveries to stations, according to the complaint. Franchisees must buy gas exclusively from Exxon and on the company’s schedule.

When market prices for gasoline are rising, the company has delayed deliveries to obtain higher prices, according to the complaint. In falling markets, Exxon has loaded gas onto its delivery trucks earlier, to avoid price drops after midnight, the dealers claim.

Exxon Mobil’s “zone pricing” saddles franchisees with gas costs that are “inexplicably disparate” and don’t “bear a relationship to meeting competition,” according to the complaint.

The company has increased the rent charged franchisees even as the real estate market has fallen, according to the complaint.

The franchisees allege the company violated the federal Robinson-Patman Act, the New Jersey Franchise Practices Act, and the state’s Unfair Motor Fuels Practices Act. They seek unspecified compensatory and punitive damages and a judge’s order ending the zone-pricing scheme.

Seven U.S. Refineries

Exxon Mobil refines crude oil into fuels such as gasoline and diesel at seven U.S. plants. The company also operates 19 power plants in the U.S. that run on natural gas and waste heat from adjacent refineries, chemicals plants and gas-processing stations.

The company’s U.S. refineries had losses of about $2.3 million a day during the third quarter. Worldwide petroleum demand fell by enough to fill 62 supertankers during the July- to-September period, according to the International Energy Agency in Paris.

By David Voreacos and Andrew M. Harris (Source: Bloomberg)

 

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