Shell Oil Co. Pays $675,000 to Settle County Price Suit

It sounded too good to be true: gas for sale to motorists at distributor prices.

And it was.

Investigators from the district attorney’s office discovered more than a dozen Shell stations across Ventura County that advertised gas at dealer prices but actually charged up to a nickel a gallon over wholesale.

On Thursday, prosecutors filed and settled a lawsuit against Shell Oil Co., the Houston-based corporation that organized the so-called Crazy Days discounts.

“Promotions for reduced prices are a good thing,” said Deputy Dist. Atty. Mitchell F. Disney, who prosecuted the case. “But the false promotion of a reduced price is illegal.”

While not admitting that the company did anything wrong, Shell Oil agreed to pay a total of $675,000 in civil fines and penalties--the bulk of which will end up in Ventura County coffers.

The company has since discontinued the promotion, which offered reductions of 7 to 10 cents a gallon one day a week through parts of 1994 and 1995.

The settlement was reached after investigators from the district attorney’s office found 13 Shell stations overcharging for gasoline advertised “at dealer cost,” Disney said.

Instead of selling gas at the cost the corporation charged dealers, the stations added between a fraction of a penny and 5 cents to the per-gallon cost of the fuel, prosecutors said.

The charges did not amount to huge increases over dealer costs, Disney said, but accounted for tens of thousands of gallons of additional gas being sold, he said.

Disney said he started wondering about the promotion when he drove by two Shell stations on the way to work and noticed different prices on the banners.

“All the stations paid the same dealer costs for gas, but when I tabled them out on the same Crazy Day, different prices were being offered to the public,” Disney said. “I knew at that point that something was wrong.”

Despite the corporation agreeing to pay $675,000 in penalties, Shell Oil Co. officials blamed individual dealers for the price discrepancies.

“The intent of the dealer price promotion was to provide a lower sale price for gasoline on designated days,” spokeswoman Becky Nash said. “It certainly was not intended to deceive or mislead consumers.”

Even without paying dealer cost, customers still got a good deal, Nash said.

“Although certain dealers, who are independent businessmen and women free to set their own prices, did not reduce their prices to cost in certain instances, all gasoline was sold at reduced prices, and consumers saved money.”

Many of the 13 Shell stations targeted by the district attorney have changed hands since the probe was launched.

But Mohammad Moalej, who owns and operates the Airport Shell station in Oxnard, said he never overcharged during the promotion.

“I was going with the price that was charged to me,” he said Thursday. “If Shell agrees to pay anything [in fines], they know what they’re doing.”

The other stations cited in the settlement were Esplanade Drive Shell, Oxnard Boulevard Shell, Rose Avenue Shell and Channel Islands Shell, all in Oxnard; Victoria Shell, Seaward Shell and Kimball Shell, all in Ventura; Camarillo Shell; Thousand Oaks Shell, Live Oak Shell and Valley Shell, all in Thousand Oaks; and Moorpark Shell in Moorpark.

None of the settlement money will be returned to customers.

“There’s no way to get the money back into the hands of the right consumers,” Disney said. “There’s no way to track down the people who paid cash.”

Instead, the $675,000--paid by the conglomerate, not individual dealers--will be divided among several funds.

Under the agreement, $42,500 will go into a statewide consumer protection account; $168,750 will go to the district attorney’s office for investigative costs and prosecution fees; and the $463,750 balance will be deposited into the county general fund, which covers most government expenditures.

Ventura County investigators also uncovered evidence that Shell stations in Santa Barbara, Los Angeles and San Diego counties also were involved in the misleading advertisements, Disney said.

Those cases were not included in the Ventura County lawsuit.

The settlement agreement does not prohibit the oil company from offering future enticements or price reductions, Disney said.

“Nothing prevents Shell from having a gas sale, but it has to be legal and truthful,” he said.