ARCO, BP Gas Station Operators Sue BP

Fifteen ARCO, BP, and am/pm franchise owners claim that BP manipulates gas supplies and prices, so as to deliver less gas when oil future prices are trending up and to deliver more gas at a higher price when oil future prices are trending down. The federal class action also claims that BP required franchisees to install a defective, centralized point-of-sale system that hurt their businesses and brought customer complaints.

The gas station owners say they bought ARCO franchises from BP because ARCO was known for a low-price strategy, mainly due to its 1980s decision to cut the price of gas for cash customers.

Besides pumping up the gas business, the lower gas prices brought the station operators more traffic in their am/pm convenience stores and car washes.

But in recent years, the plaintiffs say BP has made them install new point-of-sale systems that hurt sales and increased operating costs, manipulated gas supply and pricing, controlled the price of merchandise provided by third-party vendors and forced the stations to sell products that brought in little or no revenue.

The gas station operators primary complaint is with BP's “automatic” fuel delivery system. They say the system is not really “automatic” but instead is designed to maintain high wholesale prices.

For example, when oil future prices are trending down, signifying lower prices in the days ahead, BP delivers more gas at the higher current price. When oil future prices are trending up, BP allegedly delivers less gas, planning to deliver more when prices rise later.

The suit also charges that BP manipulates pricing by adjusting the time of day that fuel is delivered.

BP adjusts its pricing on a daily basis, telling franchisees the day's pricing at 1 p.m. each day. The new price becomes effective at 3 p.m.

If the day's price change is higher, BP will schedule deliveries to occur after 3 p.m., the station operators charge. If it is lower, BP rushes the day's deliveries to arrive before 3 p.m.

The station operators also charge that BP has not spent all of the advertising and promotion money deducted from franchisees revenues.