ALTOONA, Pa. -- Stan Sheetz, president and CEO of Sheetz Inc., and Michael J. O’Connor, president of the Virginia Petroleum Marketers and Convenience Store Association, sparred late last week in an exchange of letters setting the stage for a debate over the below-cost selling of gasoline in Virginia. A bill passed in the state Senate in late January and has moved on to the state House of Delegates, where it will be taken up in mid-February. O’Connor has challenged Sheetz to a public debate within the next two weeks on the merits of the proposed law.
Sheetz has opposed the legislation as anti-free enterprise and anti-motorist, and O’Connor and others allege that Sheetz and other large retailers--including hypermarketers such as Wal-Mart--move into a region and underprice the competition, harming smaller marketers.
In a previous letter to Sheetz, O’Connor said, “Should Sheetz continue to oppose this legislation, the only reason to do so would be to sell below cost, which is in direct variance from the testimony presented by your spokesperson.” He added, “Should Sheetz continue to oppose this amended bill, we believe that it is in the interest of all Virginia consumers to know why.”
That letter prompted a response from Sheetz, printed here in full:
Dear Mr. O’Connor,
I indicated in my January 30 letter that I would be contacting you this week to work out the terms of our proposed debate. Here is my proposal.
First, as I said last week, I am happy to accept your challenge. Our debate will expose this legislation for what it is: Special-interest legislation designed to guarantee profits for business owners, by guaranteeing higher gas prices for Virginia motorists. It’s as simple as that. Former state Attorney General Tony Troy has estimated that this legislation will cause Virginia motorists to pay $58 million a year in additional--“and unnecessary”--gasoline costs. That’s an additional $58 million “car tax,” Mr. O’Connor , “paid for by Virginia’s motorists.”
In fact, it’s worse than a car tax, because this $58 million goes, not to the government to build roads for the public, but to your members to build wealth for themselves. You want the government to guarantee their profits, and to insulate them from the hard decisions and competitive consequences faced by the rest of Virginia’s business community. What will legislators do when the next group of business owners comes seeking special protections, Mr. O’Connor? Where does it stop?
Sheetz is not some multinational corporation, Mr. O’Connor. We are a family-owned company. We employ 1,271 Virginians--good men and women, who are as deserving of protection as your members. Our employees are paid about $16.8 million in the state of Virginia. We pay approximately $479,000 in property taxes annually and about $219,000 in business taxes. Last year we sold 172 million gallons of fuel. As a result, Virginia collected 17.5 cents/gallon at our pumps, generating about $30 million in gas tax revenue for Virginia.
We work hard. We have made the difficult decisions necessary to control our costs. As a result, we are able to offer Virginians lower gas prices. We are proud of that service. We are proud of our efficiencies. We are proud of our Virginia employees. And we are proud of our Virginia stores. I welcome the opportunity to discuss these facts with you, and with the people of Virginia.
I am available to be in Richmond on either February 13 or 14, 2001. Since I believe you are interested in fairness, I am making two reasonable requests. First, to ensure fairness, our debate should be hosted and moderated by a credentialed, independent journalist. Second, to ensure the debate is open, but not subject to audience-stacking efforts by either side, the debate should be held in that media outlet’s offices. The only people in attendance should be you, me, the media moderator, and, any and all journalists who wish to broadcast or report on the debate.
I look forward to your favorable response. We stand ready to work with you in selecting the media moderator.
Very truly yours,
Stan Sheetz
Also printed in full, here is O’Connor’s reply:
Dear Mr. Sheetz:
In today’s letter you quote a former interim Virginia Attorney General, which is not surprising, since he is one of at least 18 paid lobbyists working to kill Senate Bill 458. You attribute to him an estimate that this bill will cause $58 million per year in additional gasoline costs in Virginia. Sheetz and the other opponents of this bill have said that you represent a “statistically insignificant” part of the Virginia retail gasoline market, and that any below cost sales are “occasional.” Given that Senate bill 458 ONLY prohibits below cost sales, this claim presents an interesting question: Are you and your out-of-state colleagues actually selling $58 million dollars of below cost gasoline in Virginia each year?
This bill is about small businesses in places like Ridgeway, Raphine and Christiansburg, Va. Today in these small towns there are marketers who have worked their entire lives, played by the rules and built a business to support themselves, their families and their communities. Out-of-state marketers have moved into these areas and have sold gasoline below cost for one purpose--to take away customers and to transfer wealth from Virginia communities and small business to out-of-state big businesses.
When they have taken their desired market share, the out-of-state marketers have increased consumer prices. Many members now call me at home with stories about employees they have had to lay off, about contributions to the community they can no longer afford to make, and ask, sometimes on a daily basis, how the legislation is going.
It is unfortunate that you personally, in a brochure circulated under your signature at your stores, and again in today’s letter to me, have chosen to make your colleagues in the industry the target, with statements including “they are trying to gouge the consumer,” “mandate a government minimum price,” and “are in collusion with the major oil companies to raise consumers gas prices.” Today in your letter you stated, “the 58 million goes…to your members to build wealth for themselves. You want the government to guarantee their profits.”
Untrue, Mr. Sheetz. Senate Bill 458 does NONE of the above.
Read the bill. It does ONE THING. It prohibits what you deny doing--selling below cost.
When will the TRUTH be told, Mr. Sheetz?
As a billion-dollar company, Sheetz operates under similar laws in your home state of Pennsylvania, as well as Maryland and West Virginia. If you are not targeting Virginia small firms for destruction by selling below cost, why are Sheetz and other out-of-state firms spending hundreds of thousands of dollars to defeat Senate Bill 458?
According to your website, every new Sheetz store opening is in Virginia. Why?
For the same reason you are spending so much money to defeat this bill.
Because you sell below cost in Virginia to gain market share
Because you want to continue
Because you don’t want anyone to slow down a marketing plan which has brought Sheetz’ volume in Virginia from zero to more than 172 million gallons in a few short years.
Because it is making you a lot of money.
Why can’t you just admit it?
The legislators who will decide this issue need to determine who is telling the truth. You, or me. No media spin. No filters.
Our appearance needs to be before the House Commerce and Labor Committee next week when Senate Bill 458 is debated in an open public hearing. I will be there, and I look forward to seeing you.
Sincerely,
Michael J. O’Connor
