May has been a most difficult time for jobbers. Right now it looks like June will be even worse with some of the new allotments that we are hearing about.

Already jobbers are receiving allocations that are based on even less product than they received in May. The majors are saying that the big farm needs for plowing and planting will be past. But, Senator, many of the jobbers took the major portion of their allotment and used it to take care of the farmers during this planting season that we are presently in. Now in June they need to replace these gallons to take care of their other business; for example, jobbers have not had product available to bid on city, county, or State needs. Neither has there been product available for mass transit, truckers, police, fire, or other emergency services.

Now, I have newspaper clippings here, if you would like to see them indicating that show that this is hitting the press constantly, that cities are not being able to get their bids in. Gas and diesel will still be needed as the farm crops grow. In fact, our office during the past several days, has received calls from food processors, dairies, and food distribution firms that they cannot get fuel of any sort to use in the distributing of products. In many cases, jobbers have curtailed their service station business in order to meet the pressing needs of the farmers.

Now, in June, some changes in priorities need to take place, for unless jobbers receive their rightful share of supply, this will not happen. The major refineries are the ones who have pulled out of the State and they are the ones who have curtailed their supplies. They must be forced to face up to their obligations, again, and supply these past customers.

Congress and the President cannot stand idly by and allow certain major suppliers to go about the business of building new direct company operations, taking on huge new independent accounts, such as large, high-volume discount centers, and expanding secondary brands.

The concerns of the small business oil jobber must be taken into consideration because his very existence is now in peril.

Jobbers who received termination, cancellation, or severe allocation have no prospect for new suppliers. These actions are also inequitable for the major refineries which have tried to play the game fairly, and many of them have played fairly with the jobbers. But several of the majors have made other efforts which are not quite fair to the jobbers. Whether it is pullouts or hard allocations, severe pressure is put on those remaining. The scramble for product has become a fierce struggle.

The Government must provide scrutiny to see that equitable practices are put into effect. Congress needs to investigate means to increase the supply rather than hampering any such increases.

Consideration must be given to allow coal to be used again for utilities. This could be a great help if we had some of the electric utilities back on coal. Refineries must be enlarged or new ones built. Measures must be taken to get the oil flowing from Alaska. The Environmental Protection Act must be amended postponing the Federal requirement of no-lead gasoline by mid-1974. This action alone could save 15 percent of today's gasoline supply. It could save

150 million barrels just next year and by 1980 it would save 250 million barrels.

Senator, it would be advisable for Congress to look into the price controls setup instituted by the Cost of Living Council in March of this year. When foreign crude prices are increasing almost daily, how can the Government expect to hold the price line on the majors? The action has created black markets, unfair raises to the wholesale jobber while at the same time not affecting the direct major company operations. It has kept finished product from entering the country because of prices asked by foreign refineries as compared to the price that can be legally charged to the consumer. In fact, the majors have discontinued such business practices as cash discounts, transportation allowances, and so forth, in order to comply with this.

Thank you.

Senator STEVENSON. Thank you, Mr. Deutsch.

It will take some time to develop alternative sources of supply. You mentioned coal. That has been a subject of great interest to me. You also mentioned the pipeline; both are possibilities, but they are long-term possibilities.

We face now the question of allocating at this stage, the problem of allocating them fairly. The threshold question is: Is there really a shortage?

I keep hearing of a shortage and then I keep hearing also that the storage facilities in Illinois and throughout the Midwest are full. Is there really a gasoline shortage?

Mr. DEUTSCH. You are more than likely hearing the same thing that Bob and myself hear constantly. I did not the other day, though, that Simon in his report to the committee in the House, said that the Nation enters the summer season with only 201 million barrels of gasoline in storage, which is 912 percent down over last year, while the demand is up 6 percent. That really means there is a 15-percent shortage.

I think the shortage exists now. How deep it goes, we do not know. Certainly gasoline isn't available on the market.

Bob, don't you agree? There isn't a surplus of gasoline around. Senator STEVENSON. Is it true that the storage facilities are full? Mr. DEUTSCH. We have heard this. We can't prove it.

We know this much, that there is an attempt to be building up the diesel supply for winter.

We have also heard that the barges moving up and down the river, naturally were curtailed during the flood, and this may have caused some of the problem where you have got full storage capacity. We have instructed our jobbers, and many of them are doing it, to put in additional storage to take products when there is a chance to get it.

Senator STEVENSON. You mentioned two major oil companies that are leaving the State of Illinois. Which two oil companies have left. the State of Illinois?

Mr. DEUTSCH. Well, the one which hurt tremendously was when Triangle Oil pulled out. They left us in the lurch here about the 19th of May or the 16th.

Senator STEVENSON. Is Triangle a refinery?

Mr. DEUTSCH. Yes, it is a refinery out of Houston, Tex. It was serving primarily an independent market.

The other one that has hurt, in the fact that they have moved out on the wholesale markets to a great extent was Clark Oil, which is based in Milwaukee, and they have refineries in Blue Island and Hartford, Ill.

Here in the last couple of days, some of the pullouts that we have heard about are not happening. For example, Bob can tell you what happened with Conoco, and I mention that Gulf now is going around offering contracts to jobbers they have already told that they would be leaving the State by the end of December.

Senator STEVENSON. These are branded?

Mr. DEUTSCH. These are branded jobbers, yes, sir. They have informed them now that they will be remaining in the State and they are offering them a new contract, July 1, that will be dated January 1, 1974.

This has happened within the last 3 or 4 days.

Bob, you might comment on that further.

Mr. SCHRIMPF. Yes, Continental Oil had indicated they were going to remove their brand from Illinois. Now they apparently have delayed any such decision at the present time.

Apparently since Bill Simon's voluntary system has been announced, there has been a review by some majors of their policies and it looks like some positive steps have been made in the last few days.

Mr. DEUTSCH. We have not heard anything from Triangle yet. We have only heard rumors as to what Clark is going to do. We have still about 250 million gallons roughly that are not being accounted for.

Originally when I talked to you in May we were up to 480 million that was going to be gone by June 1. Now it's dropped down considerably because of some of the changes that have taken place.

At one time, why, one-quarter of the supply that the jobbers would have had, would have been taken out of the state, because Illinois had 5.2 billion gallons of gasoline and of that 2 billion was jobbers and when you take half a billion out, why, you are taking out 25 percent. But these figures are jumping like just kind of crazy figures the last couple of days.

Senator STEVENSON. It has been reported that Clark entered into a contract with the majors. In this contract the majors agreed to supply Clark with its crude requirement and in return Clark agreed to supply the major with refined product. Do you know anything about that contract?

Mr. SCHRIMPF. We have just heard the rumor that something like that has happened. However, that is a fairly common arrangement among refineries, it has been historically whereby one company can supply crude in exchange for finished product.

Senator STEVENSON. Do you know the identity of the major in this case?

Mr. SCHRIMPF. I do not, no.

Mr. DEUTSCH. We know last winter there was supposed to be something like this with the fuel oil. At that time it was Exxon that they were working with, but we don't know anything on this gasoline. This is news to us.

Senator STEVENSON. Are Conoco and Gulf now supplying independents in Illinois?

Mr. SCHRIMPF. They are supplying their contract customers, their historic customers.

Senator STEVENSON. But only branch branded? Are they supplying nonbranded independents?

Mr. SCHRIMPF. I do not know specifically. We don't have that information.

Mr. DEUTSCH. Gulf, to the best of my knowledge, never supplied the unbranded too much in Illinois. Now it may be in some other areas they are. You see, this is the thing that happens where in this areas up here they might not even deal on wholesale gasoline, as we call it, but in other areas they could. But in Illinois Gulf was never a factor in the wholesale market. The Conoco people were. They had several accounts. Some of them-the ones that are talking today about being cut off, I would say that Conoco has cut them off.

Senator STEVENSON. Are you aware of the secondary discounting branding in Illinois?

Mr. SCHRIMPF. Yes, there is some in Illinois. I would say Continental has some, Phillips has some, almost every major has some place. We have been involved in national meetings and every company was mentioned as being in that position some place.

Senator STEVENSON. The three companies you mentioned have secondary branding in Illinois now?

Mr. DEUTSCH. Yes, I believe so.

Senator STEVENSON. What are those secondary brands?

Mr. DEUTSCH. I see what you are talking about, the secondary stations?

Senator STEVENSON. Secondary brands.

Mr. DEUTSCH. Yes, secondary brands. There are Alert. There is Awards.

Senator STEVENSON. Who does alert belong to?

A VOICE. Exxon.

Mr. SCHRIMPF. Fast Gas is Conoco.

Mr. DEUTSCH. Yes, Fast Gas is Conoco.

Phillips has a whole group of them. There is Blue Goose, Bingo. Several of them.

Now, Phillips has closed several of those stations. I noticed in Springfield just this past week that the Bingo station has been closed there and another one. So Phillips has suddenly closed some of the stations they had on secondary brands.

There was a list of these.

Senator, in Kentucky, for example, the East, BP has been very big in secondary branding. They are not in the Midwest.

Down in Texas we have heard of several of them getting into it very big down there. In fact, they have all tried it down there in one form or another under different names. Shell has Ride. Mobil has Sello.

Senator STEVENSON. Are some of these majors which are opening up the secondary brand stations the same companies that are cutting off independents?

Mr. DEUTSCH. Well, in the case of Cities Service, yes, there is one that has happened up here. They have gotten into contracts with Zayre's and Gibson's stores and these large discount centers. At the same time they have been cutting off jobbers very harshly up here both branded and unbranded.

I think that later in the morning you will have some testimony on that.

Senator STEVENSON. I will hear more of Citgo later on.

Any other cases that you are aware of?

Mr. SCHRIMPF. Illinois is a little bit behind some of the other States because of no self-service in Illinois, so the experimental programs are not going forward with the same speed here in Illinois. Senator STEVENSON. Thank you, very much, gentlemen.

The next witnesses are a panel composed of independent retailers and jobbers:

Mr. William Glassman, vice president, Liberty Petroleum Co., Mt. Vernon, Illinois, Irving Saul, an attorney for eight Chicago area Citgo jobbers; William Berman, president of Jubilee Oil Co., Wheaton, Illinois; Peter Spina, president, the Wageman Oil Co., Wheaton; Mr. Charles Hague, president, Tri-America Oil Co., Chicago; Newell Baker, president of J. D. Street and Co., St. Louis, Missouri.

Gentlemen, I will tell you what I have told the other witnesses so far: If you have statements I will be glad to enter them into the record if you prefer to summarize them, otherwise you are welcome to read them.

Let's proceed in the order in which you were introduced.
Mr. Glassman first.

STATEMENT OF WILLIAM GLASSMAN, VICE PRESIDENT,

LIBERTY PETROLEUM CO., INC.

Mr. GLASSMAN. Good morning. My name is Bill Glassman. I am the vice president of Liberty Petroleum Co., Inc., whose corporate headquarters are in Mt. Vernon, Ill., in southern Illinois. We are an independent, private brand gasoline marketer selling under the name of "Liberty" in eight States, including Illinois. The reason for our existence has been that we save the public money by offering the same high quality products of a major station at a reduced price due to our efficiencies and high volume of sales.

We have been in business since 1929, Senator. We have purchased gasoline from numerous suppliers to private branders such as Liberty. Some of our supply arrangements date back 40 years, so we are not buyers on the surplus, distressed gasoline market, which is a tremendous misnomer.

Because of the shortage of available product to companies such as Liberty, we have been forced to limit station hours in all locations and quite drastically in one-third of our locations. We were projecting sales in 1973 of 35 million gallons on the retail level; we will be lucky to achieve 50 percent of this.

Currently we have applied for an oil import quota, and we have contacted the Office of Oil and Gas concerning the voluntary allocation program. To date we have received no satisfaction from the Office of Oil and Gas.