Safeway may be forced to raise gas prices

April 9, 2012 12:00:00 AM PDT
A good way to get a good deal on filling up your tank could be coming to an end. A Bay Area judge is ordering Safeway to raise its pump prices.

The Safeway gas station on Nave Drive is typically very busy. Drivers usually have to wait in line to get an open pump. It's no surprise why: prices here are typically less expensive than what you might find at other gas stations and if you have a Safeway Club Card, it's even 3 cents cheaper. And if you buy groceries, there's even more savings -- 10 cents off per gallon for every $100 spent inside their store.

But soon, Safeway will likely have to change the way it prices its gas.

In a lawsuit, an owner of a small group of gas stations is accusing Safeway of selling gasoline below cost, which is illegal under the Unfair Practices Act. The suit says Safeway sells cheap gas as a way to lure customers to their stores and as a result, Safeway is able to make up the cost through grocery sales.

A judge indicated he will issue some sort of temporary injunction against Safeway as early as April 25, which will likely force the grocery giant to stop selling gas below cost through its club card discount program.

ABC7 spoke to the attorney who represents the plaintiff and he calls the impending injunction a huge victory.

"The benefit to the consumers is that with competition they'll get lower prices, they have more stations that will be able to compete as opposed to, if Safeway succeeds in running independently-owned gas stations out of business, there'll be no competition at which point Safeway could increase its prices because there's no competition," James Dombrowski said.

There are roughly 325 Safeway gas stations in the United States.

A Safeway representative emailed ABC7 a comment saying, "The court has not made final findings and we do not believe there has been a violation of the law. The preliminary injunction simply orders Safeway to comply with the law, which, as we have argued in court, the company is already doing.

The next court date is scheduled for April 25.


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