Mr. BURLESON. I have seen some figures someplace, indicating it would be enough to be a real consideration.

Mr. GAMMELGARD. We had a figure, I think, of 5 percent additional crude that would be required if we made all of the gasoline unleaded and that is quite an economic penalty.

Mr. BURLESON. This 5 percent relates to present consumption of crude?

Mr. GAMMELGARD. Yes. Present quality levels, yes. It would be somewhat at the lower quality level like 91 instead of 94. But that figure I don't have. I suppose it would logically fall between the 5 percent and where we are today.

The CHAIRMAN. Are there any further questions?

Mr. Byrnes?

Mr. BYRNES. You have this chart showing apparently the companies that do produce a low-leaded or no-lead gas. There is a reference to the American Oil Co.'s premium gasoline. What do we mean when we talk about premium in terms of its octane rating on high compression motors?

Mr. GAMMELGARD. Premium runs about 100, depending on the company.

Mr. BYRNES. They have an unleaded gas that can be used in yesterday's and today's high compression motors?

Mr. GAMMELGARD. Yes.

Mr. BYRNES. You can't use a 91 octane, can you, in a high compression motor?

Mr. GAMMELGARD. No, you can't operate the car satisfactorily. You might damage the car, too.

Mr. BYRNES. All the rest of these on the chart indicate they have a gasoline with a premium rating and either unleaded or low-leaded gasolines which will accommodate the 1971 models that use a lower octane or can use a lower octane?

Mr. GAMMELGARD. Yes, sir.

Mr. BYRNES. Let us take the situation as far as American Oil Co. is concerned. What is the difference in price between their premium unleaded and the leaded gasoline that they sell at 100 octane? They also have 100 octane that is leaded?

Mr. GAMMELGARD. Not in the area where they market this roughly 100 octane unleaded premium. They do not compete with themselves with a leaded premium. This is sold in the southeastern part of the country by American Oil which is a nationwide manufacturing and marketing company.

In other areas of the country, they will have a leaded premium of 100 octane, approximately. In the southeastern part, including Washington, their premium is unleaded; and in just checking it versus other leaded premiums here, when I go around and buy gasoline at different stations, it runs about a penny a gallon higher than their competitor's leaded premium.

Mr. BYRNES. I wonder why they are marketing unleaded premium when it costs more and their competitors across the street have a leaded gas that will be just as efficient, apparently. As far as the individual is concerned, I suppose what he is looking for nine times out of 10 is what will do the job at the lowest price.

Do you know anything about their marketing theory-why they have this gasoline in the Southeast?

Mr. GAMMELGARD. I think I can shed a little light on that. I normally don't like to speak for a company, but I heard Mr. Gunness testify this year before two different committees on the Hill, where the question was asked, when did you start this, and he answered, many years ago when they acquired a company in the Southeast that was then marketing an unleaded premium.

They continued the practice. They looked at extending this to the rest of the country. American Oil is about the second largest oil company in the country in volume but they could not find any economic reason for extending the market of the unleaded premium nationwide. They left it in the market territory in the Southeast. They do advertise, I think, with that unleaded premium you should have a cleaner engine and longer spark plug life and a longer life on your muffler system.

I think that is about it. They claim some advantages for a nonleaded fuel versus a leaded fuel.

Mr. BYRNES. I understand that some companies have developed low lead or unleaded gasoline and advertised it as designed to meet the ecology demands of the day, and so forth, but that those particular gasoline pumps were not very active after awhile.

The motorist was not too intrigued with the sign on these pumps. He looked at the price and found out it was a little more expensive, so he went elsewhere. Is the lack of demand, or consumption, of unleaded or low leaded gases a result of the fact that there are not many cars which can use this type of fuel at this point in time?

Is that why the demand is low?

Mr. GAMMELGARD. That could be part of the answer.
Mr. BYRNES. Or has it been the price?

Mr. GAMMELGARD. I think it is way too early to know this. Some of the pricing that is being tried out now varies quite widely company to company. This is where the marketplace factors will have a profound influence over a period of months or a year or so as to who priced theirs right and who put the right octane number on it, and so forth.

Right now, I would guess that probably at 91 octane, a good 30 percent of the cars now on the road would be able to use it satisfactorily, a good third or so.

Mr. BYRNES. Some 30 percent of the automobiles can use a low octane?

Mr. GAMMELGARD. Yes, I think so.

There will be presumably 10 million cars produced next year, and they will be designed to run on 91, as will the next year's cars, presumably. So that market would expand and with sales promotion programs and advertising and weaning customers away from what they are used to buying because we are pretty much creatures of habit in not trying something else. I think it is way too early to determine if there is apathy at the pump.

I think Newsweek recently had an article on it.

Mr. BYRNES. That may have been the article I read. It indicated there was not the sales volume on the unleaded that had been anticipated, and the motorist was still driving over to the pump with the leaded gas.

Mr. GAMMELGARD. American Oil, having tried out unleaded 91 in Detroit and Chicago, two of their large market areas, just announced this month-as Congressman Rogers said they will have it in 11,000 of their stations by the end of this year and they will have it in all of their stations next year. So they have appraised that there is a demand for this gasoline or they certainly would not be going ahead with this kind of an investment.

This is a third grade that they are putting in.

Mr. BYRNES. This applies to the companies which you have listed as having the unleaded or low leaded, I assume, and if it is low leaded, I gather it is fairly close to being unleaded.

Mr. GAMMELGARD. Half a cubic centimeter or half a gram, normally. Mr. BYRNES. Let's take the companies that produce a 91 or 93 octane unleaded gas. Don't they also produce a low-octane leaded gas?

Take American Oil. They do make a 91 octane that is also leaded. Mr. GAMMELGARD. They make a 94 octane that is also leaded with around 22 grams per gallon of gasoline. They will continue to do that. This new no lead 91 will be a third pump installation in all of stations, third tank, third pump.

Mr. BYRNES. My point is: When they put that in, it will require an additional pump for a leaded gas that will work efficiently in this lower compression automobile.

Mr. GAMMELGARD. Yes, it would.

Mr. BYRNES. They have a leaded and unleaded in the range of 91, 92, and 93, let us say. Now, the leaded one is going to be cheaper at that station than the unleaded; it is not?

Mr. GAMMELGARD. At this point I would not want to make a prediction of what it is going to be. Right now it is generally higher cost.

I think one company announced they were going to put out a 91 low lead at the same time and price as their 94 leaded.

Mr. BYRNES. I would rather not get into what is going to be announced in the future. I understood this was a list of companies that already had and were marketing low-leaded or unleaded gas. Mr. GAMMELGARD. Or will in the next month or so.

Mr. BYRNES. Which are the ones that have it now and have had it, say, a fair portion of this year?

Mr. GAMMELGARD. Most of them have introduced it. I believe Ashland Oil on this list is about to introduce a low lead. I believe Mobil is about to introduce a low lead.

Mr. BYRNES. What are the ones that have introduced and are marketing it?

Mr. GAMMELGARD. I would say the others already have.

Mr. BYRNES. I would like you to pick out one-I am not particularly anxious to make the choice in picking out Gulf or some other firm to see how it works but you pick out one that has been marketing a low-leaded or unleaded gas in the 92 or 93 octane.

Mr. GAMMELGARD. Union of California started with 500 stations in California with 93.5 octane regular.

Mr. BYRNES. They marketed in one particular region?

Mr. GAMMELGARD. In the State of California.

Mr. BYRNES. Was this an additional pump?

Mr. GAMMELGARD. No; this replaced 94 high-leaded regular and they announced at that time it would cost 1 cent more per gallon, the 9312

octane low lead, than they had priced their 94 leaded.

Mr. BYRNES. What have they found as far as their volume of sales are concerned? I assume there is usually a filling station across the street that is still selling the leaded gas at 1 cent less.

In other words, I am trying to get at the market situation.

If you make available to the customers unleaded gas, and it is more costly, but you or someone else is also marketing at the same time a leaded gas that is cheaper, and they both function just as well in the automobile, why would anybody buy the unleaded?

Mr. GAMMELGARD. We have a pretty good historic example and it is not new this year and that is American Oil's unleaded premium which has been sold for a penny higher and people have been buying it.

It has been a very good seller. You may have another factor entering now where people feel a concern for the environment where they would be willing to pay a little more per gallon for unleaded if they believe they are better off that way.

Mr. BYRNES. I have the impression that people want to talk about cleaning up the air and water, but they want somebody else to do it.

I am not so sure that it is not what happens in the purchase of gasoline, too. Would not many persons say let the other guy pay a penny more for the unleaded gas, but I am going to save 10 cents each time I get 10 gallons of gasoline.

I wonder how many times people really take the attitude, “I am going to do something about pollution besides talking about it and I am going to act in a noncontaminated manner."

Mr. GAMMELGARD. That is a human trait. There is no doubt about that, but I do think that the people are going to be faced with a higher cost car to meet the very severe tailpipe standards the 1975 tailpipe emission standards.

Detroit says they have to have an unleaded fuel to meet those standards. I say the oil industry is moving now to supply it so it will be available when those cars come out.

At that point I don't think there will be any choice.

Mr. BYRNES. When you get to the point where there is no choice, then we don't have to worry about the problem. But what about the interim, when people are putting out unleaded gas and attempting to get ready for the situation that may occur in 1975? I wonder what experience you can show us that they have been able to compete, that this new gas is able to compete with the leaded gas that works just as well but costs them 1 cent a gallon more? Does not the consumer, after a while, say, I am going to save that 1 penny?

Mr. GAMMELGARD. It seems that American Oil has determined through their test marketing that this is not a problem or they would not be moving to supply 11,000 stations if their experience had been very bad.

I don't think they would put out all this additional money for making the no-lead grade available at a higher price unless they had acceptance.

Mr. BYRNES. You can see what bothers me. I just cannot understand the economics in a penny more for gas just because it does not have lead in it and is no more efficient than another gasoline across the street which has lead in it.

Let me ask this: Can we say there is a justification for contending that this unleaded gas, even though more expensive in the long run, is not more expensive because you save on parts or spark plugs or exhausts?

Is there a justifiable basis for that contention?

Mr. GAMMELGARD. I think there is. You will have longer spark plug life. I think you will have longer life of your muffler system. How much longer and what this equates to in dollars, I don't really know, but there should be a benefit there.

Basically it should work that way.

Mr. BYRNES. I am sure that these people can make a lot of claims. But can they market it and be honest with the consumer and say, you are going to pay a penny more for your gallon of gas but that will be made up by savings on repairs and parts and in greater efficiency of your car?

Mr. GAMMELGARD. I think the average motorist buys around 700 gallons of gas a year and at a penny a gallon that would be about $7 and that would be used up very fast if you replaced your muffler every 2 years instead of 3 years.

Mr. BYRNES. You say it could. I suppose some of the advertising does suggest that you would not have to have a new muffler quite as fast or your spark plugs will last longer. I assume some of those claims are made.

Mr. GAMMELGARD. They are and I am sure some of the companies making them have conducted tests in their laboratories to be sure what they are saying is right.

Mr. BYRNES. To me, the only justification for what had been proposed in terms of the lead is in the marketplace. Why should a person buy an unleaded gas and pay a penny more for it if he can go across the street and get an unleaded gas that works just as efficiently?

Mr. GAMMELGARD. This route that is being proposed here with these companies going to a low- or no-lead gasoline, and assuming the tax is put on the lead in proportion to the amount of it used in a gallon of gasoline, that lead then basically, not much is going to go into the low-lead gasoline and it is certainly not going to go in the no-lead gasoline so the tax will be on the cars that are on the road that you can't do much about.

This is a very discriminatory tax on the people who have cars that they bought in good faith and now they would be paying around 21⁄2 cents a gallon to force them to do what?

They have no place to go. They can't buy the 91 because it won't work in their car because their car demands 96, 97, 98, 99, or 100.

Mr. BYRNES. As you would have more car owners who could make a choice between leaded and unleaded, than the economics of the marketplace would take effect.

Mr. GAMMELGARD. When they get to the 1974 models, and it may be before that, cars will have very strict standards. The Senate is pushing in the clean air bill to make the 1980 standards effective by 1975. This is going to crowd, I think, the target date of reaching the 1975 standards to about 1973 if they can possibly do it. At that time if they go the catalytic system the cars will have to have a low-lead or no leaded gasoline or the catalyst will not have a very long life.

Mr. BYRNES. You make the point that you don't think it can be available in quantity by then.

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