No More Cheap Gas at Safeway?

By Erin Sherbert Wed., Apr. 11 2012 at 4:25 PM

Any savings you had was probably spent sitting in line waiting for the next free pump at Safeway

The price at the pump could get even pricier -- but only at your local Safeway store.

An Alameda County judge has "hinted" that he will block Safeway stores from offering cheaper gasoline to their Club Card members and loyal shoppers across the Bay Area. And you can thank the surrounding fuel stations for that.

A group of local filling stations filed a lawsuit against Safeway, claiming the big chain grocer was offering cheaper fuel and putting other stations are making it harder to lure broke-ass drivers to their pumps.

The lawsuit was first filed in 2008 by Dixon Gas Club, which claimed Safeway was violating the California Unfair Practices Act by offering promotional discounts through its grocery rewards card and Club Card programs. The Club Card promotion gives Safeway customers a .03 percent discount on fuel and the Grocery Rewards Program gives shoppers a discount on gasoline depending on how much they spent on groceries.

That sounds fair ... if you are a Safeway shopper. However, Alameda Superior Court Judge Wynne Carvill said an internal document describing Safeway's pricing strategy proves that that the store's policies are harming local gas stations.

"It is clear that those who developed defendant's discount programs believed the 3¢/gal. discount on the Club Card would generate additional volume and do so by diverting sales from, among others, its single product competitors -- including those like plaintiff who compete on price and are often smaller market participants," Carvill wrote.

Jim Dombroski, the attorney representing the gas stations, says he is looking forward to Carvill ordering a preliminary injunction later this month. "Unfortunately, the perception is that the public generally just wants the cheapest gas available, they don't care if it's sold below cost or not," he told Courthouse News.

And although he is correct about that, Dombroski makes another good point: If Safeway can run all other gas stations out of town, then it can ultimately control the price of fuel, and that's never a good thing.

"That's where the consumer gets hurt," he said.

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Tags:

cheap gas, fuel stations, Safeway

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I pump gas

The gas stations filing the lawsuit are just showing sour grapes toward a competitor. This is absurd - Costco does the same thing in offering a lower price to their members only, and similar lines for gas can be seen right around the corner from 3 other gas stations! How is this any different?! Besides which, there's that small detail that this is the fundamental basis of capitalism - and I'm a liberal. If the other gas stations aren't willing to accept less profit that is their business decision, unwise as it may be. In any economy a business owner has to be ready for new businesses opening up near them selling the same product, and ready in kind to adjust their own "marketing strategy." I can assure you that even if Safeway's strategy is to attract more store shoppers by the low gas prices, they are not going to operate the gas stations at par, or much less at a LOSS - whoever is trying to convince us of that needs to go back to Bidnezz School Page 1. And speaking of bidnezz, the lawsuit business owners just need to mind their own, and think of new and creative ways to attract their OWN customers! It's not as if there is a significant disparity in their gas price that isn't available somewhere else or thru some other type of savings or rewards program. And what the F are the other stations even complaining about if the price that's running them out of business is for members only? That can be a pro AND a con for Safeway. Not everyone is a Safeway member, nor wants to be, and may be deterred by the idea of having to sign up for a membership with endless emails or a tedious application to fill out (consumer psychology is amazingly impatient). This group will help mitigate the "damage" by the new kid on the block. That's all that's going on here, plus probably complacency by the other gas stations that have been there for years and don't like to "think extra" once they have their costs sheets and formula for success working in one direction - it's hard to shift once you've established a routine but that's like honey. It ain't always going to go your way. Once the novelty wears off, you'll see that the wave will level out again and these business won't go broke - they're just bitter is all, waa. Ridiculous and petty - again: Mind your OWN business (literally) and get back to work. And while you're at it, could you stop by Safeway and get me a 2 for 1 on the twinkies? They have a sale this week and I don't have a club card.