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Rules Committee continues debate on proposal to force refiners to divest city gas stations after OEA finds little price effect
Summary
The committee heard an Office of Economic Analysis presentation finding the proposed 'divorcement' ordinance is unlikely to change San Francisco gas prices because wholesale 'zone pricing' and franchise agreements limit retail competition; the committee continued the measure to the chair and plans scheduling in January.
Supervisor Tom Ammiano framed a draft ordinance that would require petroleum refiners to divest company-operated service stations in San Francisco and bar future refiner ownership, citing unusually high local gasoline prices and concerns about vertical control.
The City Attorney described the measure and an amendment of the whole that would extend the ban to wholesale suppliers. Bill Lester, staff economist at the Office of Economic Analysis, presented the OEA report and its central finding: changing ownership alone is unlikely to produce significant citywide price reductions because wholesale pricing practices ('zone pricing') and long-term franchise contracts limit the degree of retail competition. OEA data presented in the hearing included that refiner-owned stations account for about 22% of San Francisco stations but generate roughly 40% of local fuel revenue, and independent non-branded stations were observed to sell at roughly six cents per gallon less on average.
Public commenters included independent station operators and trade groups. The California Service Station Automotive Repair Association urged support, saying independent dealers pay high rents and are constrained by suppliers; the Small Business Commission suggested formal review by that body. Supervisors pressed OEA staff on comparative jurisdictions and whether divorcement elsewhere affected prices; OEA said it did not have directly comparable pricing data.
After extended discussion and an amendment-of-the-whole proposal, the committee continued the topic to the call of the chair for further amendments and scheduled consideration in January.
