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Miami Herald: Shell, Texaco clients seek refunds

FROM OUR AUGUST 2004 SHELL NEWS ARCHIVE…

Miami Herald: Shell, Texaco clients seek refunds

“faulty fuel sold by Shell”: “said it has received about 70,000 claims: “figure will easily run into the tens of millions of dollars.”; About 70,000 claims have been filed due to the fuel-quality problem that shut down Shell and Texaco stations in May, but as many as 500,000 people could be affected.; all supplied with the substandard fuel from a Port Everglades terminal operated by Motiva Enterprises…

BY PATRICK DANNER

[email protected]

Posted on Thu, Aug. 12, 2004

Some 25,000 Floridians have sought reimbursement for damage to their automobiles that they claim was caused by faulty fuel sold by Shell and Texaco gas stations, Shell Oil Products disclosed.

The fuel-quality fiasco that shut down Shell and Texaco stations over the Memorial Day weekend impacted other companies as well. BP, ConocoPhillips, Colonial Oil and Valero Energy Corp. were all supplied with the substandard fuel from a Port Everglades terminal operated by Motiva Enterprises, a refiner partially owned by Shell, a Shell spokesman said. Those companies, however, reported few — if any — complaints from customers.

Overall, Shell said it has received about 70,000 claims from drivers in Florida and Louisiana — up from about 9,000 on June 1. The fallout resulted from elemental sulfur found in gasoline originating from the Houston-based Motiva’s refinery in Norco, La. The sulfur can corrode the silver electrical contact on the gas-gauge sensor in some vehicles, causing the fuel gauge to indicate the tank is full when it’s actually less than full or empty.

Shell and Texaco stations initially halted sales of regular and midgrade fuels after the problem surfaced May 27. But by the next day, all of the pumps were turned off at 450 Florida stations. Gas sales resumed at all affected stations by June 2.

Shell Oil Products spokesman Shawn Frederick wouldn’t say how much the mishap has cost. Considering the cost to replace a gas-gauge sensor ranges from about $150 to more than $1,000 in some high-performance cars, the figure will easily run into the tens of millions of dollars.

”We are working diligently to reimburse affected customers and to resolve claims,” Frederick said.

Florida has received about 1,025 complaints related to the fuel problem. All but 78 were made in June. Many just wanted information about getting their vehicles repaired, while others complained that their reimbursement checks weren’t being processed fast enough, said Eric Hamilton, chief of Florida’s Bureau of Petroleum Inspection, part of the Department of Agriculture and Consumer Services.

”We’re still in the process of cutting checks,” Frederick said.

The state is satisfied with how Shell and Motiva have responded, Hamilton said. And Florida has since instituted an emergency rule establishing maximum levels for elemental sulfur in gasoline sold in the state.

”We have been testing gasoline as it arrives at the terminals, and we have not found any gasoline that would be corrosive to the silver” electrical contacts, Hamilton said.

Meanwhile, Louisiana lawyer Daniel E. Becnel Jr. estimated that at least 30 lawsuits have been filed against Shell and Motiva. Becnel, who has filed a federal lawsuit in Louisiana, estimated as many as 500,000 people may have been affected, based on his communications with other lawyers involved in the litigation. At least one state court case and a federal court case have been filed in South Florida, but lawyers handling those cases didn’t return calls.

Becnel, who has been seeking to consolidate all of the suits into a single case, said the framework for a settlement in some of the Louisiana cases was hammered out last week with Shell and Motiva.

”We haven’t agreed to a definite number yet, but we have agreed to a broad outline of how it will be negotiated,” Becnel said.

He estimated a final settlement may take as long six months to reach.

Motiva has agreed to continue the voluntary repair/reimbursement program, Becnel said. People who signed releases at the time repair work was completed still will be allowed to pursue claims if they discover later that the tainted fuel caused additional damage.

A battery of expert witnesses has been hired to determine if the damage to vehicles extends beyond the gas gauge, Becnel said. Shell is unaware of any other problems caused by the fuel, Frederick said.

Other gasoline suppliers weren’t nearly as hard hit by claims as Shell and Texaco. Motiva provides fuel to other suppliers under exchange agreements.

BP received some of the substandard fuel, but it received only about 30 claims from customers, company spokesman Howard Miller said. He didn’t know why the number was so low.

”I can’t give you an answer to that one, other than to let you know that somehow, some way, we have been very fortunate,” Miller said.

“I just think it was luck of the draw.”

Valero, which has about 11 locations in South Florida, reported one of its ”unbranded customers” received some of the problem fuel but hasn’t received any complaints.

Colonial, which supplies to Cumberland Farms and RaceTrac stores, said the few complaints it received were from the Tampa area, where the fuel was distributed from a Motiva terminal in the Port of Tampa, and not South Florida.

Despite being identified by Shell as among the companies that received the substandard fuel, ConocoPhillips denied it got any. Frederick said ConocoPhillips had requested that any claims be handled by Shell.

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