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Thursday, August 9, 2012

Safeway Says No More Cheap Gas for You

Posted By on Thu, Aug 9, 2012 at 2:06 PM

The picture says it all - A SIEGEL VIA FLICKR
  • A Siegel via Flickr
  • The picture says it all

Gas prices hit consumers right in the jugular this week. As if Chevron's refinery fire wasn't enough to make us gag at the pump, Safeway stores now say they will no longer offer cheaper gasoline to their Club Card members and loyal shoppers. 

Local competitor Dixon Gas Club takes the blame for that.

Safeway discontinued the Club Card program nationwide last week -- three months after an Alameda judge ordered a preliminary injunction, siding with local competitors who were less than thrilled about Safeway's super-cheap gas promotion.

The hunt is not over for Dixon Gas Club, though. This competitor hopes to seek a permanent injunction against Safeway's Gas Rewards programs, Dixon's attorney James Dombroski said.

They filed the first lawsuit in 2008, in which they criticized Safeway for allegedly offering promotional discounts through its rewards programs. Its Club Card promotion gave Safeway customers a 3-cent discount on every gallon of gas, and the Grocery Rewards Program saved shoppers gas money depending on how much they spent on groceries at Safeway. Local gas stations worried that Safeway was snagging drivers who are always looking for the best deal on gas.

But Safeway said that its discount cards have no correlation to the court order, Safeway spokeswoman Teena Massingill told Courthouse News.

"The court order simply says that Safeway will comply with the laws governing the sale of fuel, and we already are doing so," Massingill said. "We have been able to obtain low prices from our suppliers, and pass along those savings to our valued customers.

"Our customers can continue to earn significant fuel savings through our Gas Rewards program," she added.

Back in April, Alameda Superior Court Judge Wynne Carvill said an internal document which described Safeway's pricing strategy proved that the store's policies have been making business tough for other area gas stations.

Initially, Safeway was barred from setting gas prices and Club Card discounts below the allocated cost of fuel, unless the prices remain at or above that of their competitors.

Now, Dixon Gas Club will set its prices at or above its costs, or it will try to match the lowest price of its competitors, Dombroski said.

"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.

The lawyer made another valid point: If Safeway killed all the other gas stations, it could ultimately control the price of fuel -- and no one wants another Rockefeller.

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

The next case will go to trial in early 2013.

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Suzanne Stathatos


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