Three weeks after a new state law prohibiting zone pricing of gasoline went into effect, gas stations on the South Fork are still charging more than anywhere else on the East End.
Though the price for gasoline has dropped precipitously in recent weeks, drivers who regularly leave the Hamptons are still finding that gasoline costs more than 25 cents more per gallon here than it does just 10 miles west in Riverhead, despite a law that went into effect on November 24 that was designed to outlaw charging more for gasoline in supposedly wealthy areas.
According to anecdotal reports, the least expensive gas on the East End was an amazing $1.75 per gallon reported on December 7 at the Valero station on Route 25 in Jamesport. On December 9, the Citgo station on Route 24 in Riverside was advertising regular gasoline for $1.89 per gallon, while, 10 miles away, the Hess station on County Road 39 in Southampton was charging $2.32 and the Sunoco station just east of there was charging $2.35 for regular gasoline.
The Consumer Protection and Fair and Equitable Motor Fuel Pricing Act was designed to keep oil wholesalers from charging more based on the demographics of an area, and carries a penalty of $10,000 per violation per day.
So why have the prices not gone down if the cost of violations is so steep?
The answer is pretty simple, according to Kathryn Odessa, the executive director of the Long Island Gasoline Retailers Association. Refiners and their affiliates are exempt from the law, she said.
New York State Assemblyman Fred Thiele, who pushed to have the new law passed, said that while gas stations that are owned by oil companies would be exempt, most brand-name gas stations here are franchises that are independently operated.
“In company-owned stations there’s no sale from the wholesaler to the retailer,” said Mr. Thiele, who added that “there are very few company-owned stations” on the East End.
Ms. Odessa said that, while retailers are in favor of the law, “all of the hard work will not change much for any of us.”
Ms. Odessa said that she assumed lawmakers knew when they drafted the law that refiners and their affiliates would be exempt.
“This has floated around for 20 years. It never passed,” she said. “We’ve always had a hard time getting this through. That loophole may have been part of the issue.”
Ms. Odessa said that stations that sell “only independent unbranded” gasoline bought from a distributor as is, not from a refinery, would have to charge less for gasoline under the new bill.
For example, the price at the Superior gas station in Aquebogue, one of the few independent gas stations in the area, which had historically carried higher-priced gas than neighboring stations, is more in line with prices in the area. This past weekend it was selling regular gasoline for $1.99 per gallon.
Ms. Odessa said that Empire, Valero and other small companies that buy from distributors, not refiners, may have to abide by the law, though she said that they are not the companies that tend to engage in zone pricing anyway.
“Most of the retailers in business will continue to fall victim to zone pricing,” she said in a letter to The Southampton Press this week. “This is apparently why, after all of these years, this bill finally passed into law without oil company resistance.”
Mr. Thiele said, however, that The New York State Petroleum Council had “lobbied vigorously against this legislation,” despite the council’s associate director Cathy Kenny’s recent letter to The Press in which she stated that the oil industry did not have undue influence over the state legislature.
Ms. Kenny said that the major oil companies contributed less than $6,000 to the entire state legislature, including campaign committees, in 2007.
Ms. Kenny stated that the law does not apply to refiners or their affiliates, and made reference to several studies that indicated that attempts to ban zone pricing would have an adverse effect on consumers because prices would need to be raised in other areas to make up for lost revenues in the areas where zone pricing is currently in effect.
“It’s obvious that they’re challenging the state to enforce the law,” said Mr. Thiele. He added that he and another assemblyman, Adam Bradley of Westchester, who introduced the current law, wrote to the New York State Attorney General asking that the law be enforced as soon as it went into effect, because they anticipated that the oil industry would challenge it.
“They have it under advisement. They have to build a case if they’re going to enforce it,” said Mr. Thiele of the Attorney General’s office. “They have the right to get restitution, an injunction, and enforce a civil penalty. The law’s got a lot of teeth.”
The Attorney General’s office did not respond to requests for comment.