Discount gas prices fuel dispute in Anoka

Minneapolis Star Tribune/April 9, 2005
By Kevin Duchschere

When the Dr. R.C. Samanta Roy Institute of Science and Technology of Shawano, Wis., starts experimenting with gas prices, it’s sure to raise a fuss.

Officials from the Minnesota Commerce Department are investigating a fuel war in the Anoka area, where the Roy group’s newly opened Exxon station at Hwy. 10 and Cutters Grove Avenue in Anoka has won applause from consumers and boos from competitors for its rock-bottom prices.

On Thursday, the Exxon station, which bears no other name but “This Is My Station” on the marquee, advertised regular unleaded gas for $2.11 per gallon.

But a sign there also told customers, “ALL GAS DISCOUNT 10 CENTS PER GALLON,” in effect putting the price 4 cents below Minnesota’s legal minimum price Thursday of $2.05. By Friday, prices at several stations in the area had fallen a dime or more from Thursday’s prices.

“How do you possibly give that much money away?” asked Sid Haugtvedt, whose Phillips 66 station a half-mile away advertised regular unleaded for $2.13 a gallon Thursday and $2.01 per gallon Friday.

The answer may rest with the man who heads the Science and Technology Institute, Dr. R.C. Samanta Roy himself – better known to Minnesotans in the 1970s and 1980s as Brother Rama Behera.

A Shawano gas station also owned by the school group was recently sued by exasperated competitors who claimed that it illegally undercut Wisconsin’s minimum price.

Roy, who changed his name a few years ago, is a former Hindu who for decades has preached a unique fusion of Christianity and Judaism that rejects mainstream religion. The group has been variously known by the names Followers of the Lord Jesus or Disciples of the Lord Jesus.

Roy is president of the Science and Technology Institute, whose subsidiary Midwest Oil of Minnesota has bought gas stations in Albert Lea and St. Paul as well as Anoka.

Neither Roy nor the group’s local business agent, Minneapolis lawyer Naomi Isaacson, returned phone calls Thursday. Isaacson, one of the institute’s directors, is listed as business agent for the Shawano and Anoka gas stations.

But Rebekah Brown, a Hastings lawyer who represents Midwest Oil, which she said is owned by Roy’s institute, said she had been assured by state officials that the station’s discounted price was legal and that neighboring stations were using similar pricing tactics to win business.

Fair competition

Friday afternoon, the Exxon station posted a price of $2.01 for unleaded regular, attracting long lines at the pumps. The next-nearest competitor on the same side of difficult-to-cross Hwy. 10-169, a Superamerica, matched that price, though without a discount. Next door to that, a Mobil was selling unleaded regular for $1.94, which owner Tom Wright said put him at the legal minimum but would still have been 3 cents above the Exxon price after a 10-cent discount. Wright said he could only afford to sell at that price for three or four hours.

He and other station owners in Anoka insisted that the issue isn’t competitiveness, but that the Exxon station has been driving prices below the market rate for weeks. It’s not fair, they said, because the Exxon station doesn’t play by the rules.

In 2001, Minnesota required a formula based on wholesale price, fees and taxes to determine each day a floor for gas prices that in effect prevents station owners from selling gas below cost.

“The intent of the law was to prevent the big players from putting smaller operators out of business,” Commerce Department spokesperson Bruce Gordon said.

He added: “Our experience is that there are some David-vs.-Goliath complaints, but more David-vs.-David.”

Gordon said the Commerce Department has about 13 active investigations involving below-cost gas sales, including the price war in Anoka. Violators face civil penalties and may appeal to an administrative law judge.

Wisconsin has a similar law. Shawano gas station owners alleged that a Mobil station owned by Roy’s institute violated it last year. A Shawano County circuit judge found for Roy’s competitors in December. The decision is being appealed.

“Since then they have been following the market more closely, but they’re always at the edge,” said Frank Slattery, an Oshkosh attorney who handled the case for the station owners.

According to a recent series of stories published by the Shawano Leader newspaper, Roy and his organization have been a focus of gossip and speculation on northeastern Wisconsin for years. The paper reported that his group has bought nearly $5 million worth of property in and around Shawano since 2000, apparently in hopes of building an international boarding school to house the science institute.

Shawano, with a population of about 8,200, is about 40 miles northwest of Green Bay.

Roy’s activities also have earned attention in the past. In the late ‘70s and early ‘80s, when he was known as Rama Behera, Minnesota papers reported the efforts of some parents to de-program children who they claimed had been indoctrinated. In recent years, several former members of the group have complained of mistreatment.

Haugtvedt, who bought his station and car repair business a year ago, said the three-month price war has hurt stations from Coon Rapids to Elk River. He estimated that his own sales are down about 30 percent.

What he can’t figure out, he said, is how they’re making it or what their strategy is. “Are they trying to run people out of business?” he said.

Pump talk

At the Exxon, Michael Stoughton of Champlin was filling up a family van Friday, saying he’d been just passing by and pulled in because of the price.

“If someone’s doing something illegal, I wouldn’t want to patronize them,” he added.

Kong Chang of Elk River, on his way to do some fishing at French Regional Park and filling up a small sedan, said he was aware of some controversy surrounding the station. “I’m just trying to save some money,” he said.

Frank Yamoutpour said he first met Isaacson and other members of the group when they approached him last year about buying his Shell station in Ramsey. They had already bought the Exxon station a mile away and accepted Yamoutpour’s price of $4 million for his property, he said. But he said the sale fell through when they failed to come up with a down payment.