Sunoco 2008 Annual Report Download - page 28

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Product liability claims and litigation could adversely affect our business and results of operations.
Product liability is a significant commercial risk. Substantial damage awards have been made in certain
jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of various
products.
Along with other refiners, manufacturers and sellers of gasoline, we are a defendant in numerous lawsuits
which allege MTBE contamination in groundwater. Plaintiffs, who include water purveyors and municipalities
responsible for supplying drinking water and private well owners, are seeking compensatory damages (and in
some cases injunctive relief, punitive damages and attorneys’ fees) for claims relating to the alleged manufacture
and distribution of a defective product (MTBE-containing gasoline) that contaminates groundwater, and general
allegations of product liability, nuisance, trespass, negligence, violation of environmental laws and deceptive
business practices. There has been insufficient information developed about the plaintiffs’ legal theories or the
facts that would be relevant to an analysis of the ultimate liability to us. These allegations or other product
liability claims against us could have a material adverse effect on our business or results of operations.
Federal and state legislation could have a significant impact on market conditions and adversely affect our
business and results of operations.
From time to time, new federal energy policy legislation is enacted by the U.S. Congress. Any federal or
state legislation, including any potential tax legislation, could have a significant impact on market conditions and
could adversely affect our business or results of operations in a material way.
Disputes under long-term contracts could affect our business and future operations in a materially adverse
way.
We have numerous long-term contractual arrangements across our businesses which frequently include
complex provisions. Interpretation of these provisions may, at times, lead to disputes with customers and/or
suppliers. Unfavorable resolutions of these disputes could have a significant adverse effect on our business and
results of operations.
Competition from companies having greater financial and other resources than we do could materially and
adversely affect our business and results of operations.
We compete with domestic refiners and marketers in the northeastern United States and on the U.S. Gulf
Coast, and with foreign refiners that import products into the United States. In addition, we compete with
producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the
requirements of our industrial, commercial and individual consumers. Certain of our competitors have larger and
more complex refineries, and may be able to realize lower per-barrel costs or higher margins per barrel of
throughput. Several of our principal competitors are integrated national or international oil companies that are
larger and have substantially greater resources than we do. Unlike these competitors, which have access to
proprietary sources of controlled crude oil production, we obtain substantially all of our feedstocks from
unaffiliated sources. Because of their integrated operations and larger capitalization, these companies may be
more flexible in responding to volatile industry or market conditions, such as shortages of crude oil and other
feedstocks or intense price fluctuations.
We also face strong competition in the market for the sale of retail gasoline and merchandise. Our
competitors include service stations operated by fully integrated major oil companies and other well-recognized
national or regional retail outlets, often selling gasoline or merchandise at aggressively competitive prices.
Our chemicals business competes with local, regional, national and international companies, some of which
have greater financial, research and development, production and other resources than we do. We also face
similarly strong competition in the sale of base oil lubricant products.
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