find that in virtually every case prices reported in Baltimore are lower than the other east coast cities and the national average. And we have got an exhibit here which will give you that information in detail. For example, if you refer to it you will find that we have Atlanta, Ga.; Norfolk, Va.; Baltimore; Washington, D.C., and Philadelphia, and you will find with one exception, that prices were lower in Baltimore-and Baltimore is in an area where we have no refineries whatsoever. Let's take Philadelphia. You have numerous refineries up in Marcus Hook and Chester. They are surrounded by refineries. And you have Atlanta along in the pipeline, and they get a much reduced rate from the pipelines-which is controlled by the big oil companies, than the other cities that are farther north.

So you will find that the average rate there speaks for itself. And then we also showed the number of retail service stations in Maryland and the region/U.S.A. as to the number that have closed up here.

Mr. BEDELL. Without objection, that will be entered in the record together with your prepared statement.

Mr. GOLDSTEIN. In addition, considerable attention has been paid to the declining number of service stations in the Nation. We saw a similar pattern in Maryland prior to enactment of the divorcement law.

However, our research shows Maryland's experience is counter to the current trend. The loss of stations in Maryland has remained normal and has not accelerated. According to the Lundberg Letter, 20 percent of all retail service stations in the United States have closed since January 1979. In our region the figure is 18 percent. In Maryland, however, the number of stations closed since January 1979 is 194 or 5.6 percent. The results of our findings are on the chart attached to my statement.

I firmly believe Maryland has lower prices and a more stable marketplace because of our divorcement law. The resulting competition among small businesses has also benefited the consumer through improved service at the retail service station.

Now, in our State when you go to your stop-and-go they don't care whether you live or die. It could be the hottest summer day. They have no bathrooms or no water. They say, I am sorry, we don't give you those kinds of benefits. And I just get on down the road and buy my gas some place else. And I can tell you, I travel all over the State of Maryland. Around 100,000 miles a year from one part to the other, because after all being a tax collector, a revenue commissioner and all the other jobs I have, if you stay out of sight you never win an election the next time, so I make it my business to travel all through the State, and I stop at different service stations from the top of Backbone Mountain, MarylandGarrett County to the white sands of Worcester County and I know what these people are thinking—

Mr. BEDELL. Some of the members of the committee would understand what you mean.

Mr. GOLDSTEIN. That's why they are sitting up here today. Yes, sir. Out of sight out of mind. [Laughter.]

Sometimes a lot of these Congressmen get involved with the life around Washington, big social life, you know, and forget about the

folks back home. You don't want to do that if you want to be successful.

I have a few comments regarding H.R. 1362. First is allowance of surcharges beginning on line 22 of page 6. Such a provision could well be a license to steal. At the very least, a ceiling should be placed on this allowance.

Let me elaborate. Permitting surcharges on top of uniform rack pricing allows the oil company to discriminate in the charge it makes to its various consumers by adding on items such as brand services, transportation, maintenance fees, credit fees and a number of other charges. This procedure can defeat the very purpose of a uniform rack pricing and that is why a ceiling should be placed on the surcharges if they are to be permitted.

Second, I note that small refiners are exempted. I would urge the committee not to exclude any producer or refiner from the provisions of H.R. 1362.

In our study of the Maryland marketplace, we concluded that the operations of retail outlets by small producers or refiners would be harmful. If the committee feels it is desirable from a national standpoint to exclude small producers and refiners from the provisions of H.R. 1362, then I would request that the committee include a provision that H.R. 1362 would not preempt stricter provisions of similar State statutes.

I would also like to file for the record, based on what Senator Metzenbaum stated, an editorial which appeared in Business Week, April 6, 1981, entitled "Oil Invites Distrust." The very things he commented on a few moments ago. And the last sentence of that editorial says: "By saying one thing and doing another, the oil industry has seriously damaged the already low opinion of business held by the general public." It goes on and talks about these oil companies buying out-Sohio buying Kennecott, and Socal bidding for AMAX, and Arco already owning Anaconda, and so forth, and so on. And a company called Mobil owning Montgomery Wardputting $300 or $400 million to keep it going.

Mr. BEDELL. Without objection, the document will be entered into the record.

[See appendix F.]

Mr. GOLDSTEIN. I would like to thank you very much for the opportunity of testifying and I would be glad to answer any questions the committee members may have, sir.

[Mr. Goldstein's prepared statement and attachment follow:]

PREPARED STAtement of LOUIS L. GOLDSTEIN, MARYLAND STATE COMPTROLLER Chairman Bedell, members of the Committee, I am Louis L. Goldstein, Comptroller of the State of Maryland. With me is Arthur Price, Chief of Motor Fuel Inspection for my office. I want to thank you for the opportunity to testify here today on H.R. 1362. In Maryland my office is responsible for collecting the motor fuel tax and regulating the retail gasoline business. Maryland became the first state to pass divorcement legislation during the 1974 session of the General Assembly. Complaints of lease cancellations and discrepancies in the quotas of gasoline allocated to different kinds of retail service stations flowed into our office and the offices of other state officials during the spring and summer of 1973.

A study conducted by our office led us to the conclusion that supplies of gasoline were being directed away from independent dealers and toward more profitable company operated stations.

The study also concluded that a clear trend toward establishment of more company operated stations, at the expense of independent dealers, was growing. A part of

this trend seemed to be a lessening of full service stations and more arbitrary control over such amenities as hours of operation and credit cards.

On September 13, 1973, I met with hundreds of retail service station dealers in Baltimore and explained to them the concept of the divorcement proposal. The legislation was introduced into the House of Delegates and the Maryland State Senate during the 1974 session. Committees in each house held public hearings and passed the bills by overwhelming majorities. Testimony at that time indicated that approximately ten percent of Maryland's nearly 4,000 service stations were company operated.

The Governor held a veto hearing to give all parties a final chance to be heard. The Bill was signed into law on May 31, 1974. Here a brief explanation of the relevant part of Maryland's law would be appropriate. Maryland's divorcement law provides that no producer or refiner of petroleum products may operate a major brand, secondary brand or unbranded service station in the State of Maryland with company personnel, a subsidiary company, commissioned agent or under a contract with any person, firm or corporation managing a service station on a fee arrangement with the refiner or producer. The stations must be dealer operated.

There is no "grandfather clause" in Maryland's law and there is no requirement for the companies to sell the service station property. The law pertains only to the operation of the service station. Further, the law as it was originally passed provided a one-year grace period for companies to find dealers.

The law was challenged in the Maryland courts and, ultimately, in the United States Supreme Court. The Supreme Court upheld the constitutionality of the Maryland divorcement law in a landmark decision handed down June 14, 1978. In its decision, the United States Supreme Court struck down the arguments of the oil companies that the Maryland Statute was unconstitutional in light of the Sherman Act and the Robinson-Patman Act, and that it violated the Commerce and Due Process clauses of the United States Constitution. The Supreme Court upheld the power of the Maryland General Assembly to enact legislation of an economic regulatory nature.

Under the Mandate of the United States Supreme Court, the State of Maryland prepared for implementation of the divorcement law. Our office required oil companies to report the locations of all company operated stations on August 1, 1978. Operation of stations was to be turned over to independent dealers by July 13, 1979. There were approximately 250 company operated stations in Maryland as of August 1, 1978.

The effects of Maryland's divorcement law have been beneficial to the consumer and to the retail service station dealer. Arguments have been advanced that divorcement causes increased prices. Our office has conducted a study of prices and apparent dealer margins as reported by the Platt's Oilgram and the Lundberg Letter. In comparing data for similar East coast cities-we find that in virtually every case prices reported in Baltimore are lower than the other East coast cities and the national average. In addition, considerable attention has been paid to the declining number of service stations in the nation. We saw a similar pattern in Maryland prior to enactment of the divorcement law. However, our research shows Maryland's experience is counter to the current trend. The loss of stations in Maryland has remained normal and has not accelerated. According to the Lundberg Letter, 20 percent of all retail service stations in the United States have closed since January 1979. In our region, the figure is 18 percent. In Maryland, however, the number of stations closed since January 1979 is 194 or 5.6 percent. The results of our findings are on the attached chart.

I firmly believe Maryland has lower prices and a more stable marketplace because of our divorcement law. The resulting competition among small businesses has also benefited the consumer through improved service at the retail service

station.

I have a few comments regarding H.R. 1362. First is the allowance of surcharges beginning on line 22 of page 6. Such a provision could well be a license to steal. At the very least, a ceiling should be placed on this allowance.

Secondly, I note that small refiners are exempted. I would urge the committee not to exclude any producer or refiner from the provisions of H.R. 1362.

In our study of the Maryland marketplace, we concluded that the operations of retail outlets by small producers or refiners would be harmful. If the committee feels it is desirable from a national standpoint to exclude small producers and refiners from the provisions of H.R. 1362, then I would request that the committee include a provision that H.R. 1362 would not preempt stricter provisions of similar state statutes.

Thank you once again for the opportunity to testify here today, and I will be happy to answer any questions.

Mr. BEDELL. Thank you very much, Mr. Goldstein.
Any questions, Mr. Mavroules?

Mr. MAVROULES. Thank you, Mr. Chairman. Mr. Goldstein, thank you for your very candid report and testimony before the committee. You realize, of course, that probably some time today and tomorrow there will be others who will be coming before the committee, and perhaps giving us the other view of what we ought to do.

Mr. GOLDSTEIN. Oh, yes, sir.

Mr. MAVROULES. Therefore, it is important that I, on behalf of the committee, get you on record and, therefore, I have prepared a few questions for you.

Mr. GOLDSTEIN. Ask me anything you want, sir. I would be glad to answer if I can.

Mr. MAVROULES. Very well. Let's go back to your prepared testimony where you indicated that the average gasoline prices in Baltimore have been as low or lower than what is found in comparable cities and other States.

Mr. GOLDSTEIN. That's right, sir.

Mr. MAVROULES. Do you dispute that? Those who claim that divorcement legislation would increase the cost of gasoline to consumers? I would like your personal opinion.

Mr. GOLDSTEIN. I absolutely don't agree with that. We have had the experience in Maryland now. We are the first State to pass the law and that was the very same statement they made to the respective committees of our State legislature, when they opposed this legislation. It hasn't worked that way.

Mr. MAVROULES. The reason I asked-it might be somewhat repetitive but I think it is important we have it on the record. OK? Mr. GOLDSTEIN. Yes, sir.

Mr. MAVROULES. Some people have suggested that if major integrated refiners are barred from direct operation of retail outlets

there will be no more high volume gas-and-go outlets. What has been your experience in Maryland?

Mr. GOLDSTEIN. We haven't had that problem in Maryland. You see, right now, based on the information that we read from reports that we get and papers-at the present time there is more gasoline than ever-between 280 and 290 million barrels at 42 gallons to a barrel, and most refiners now are at about 67 percent of their capacity.

We in Maryland have the Colonial pipeline coming through Maryland, and we monitor ships and barges. We monitor interstate trucks. This good man right here has all those records so we know what we are talking about. We know what is in the storage. And they have got more than they can drink-they can't drink it. They have not found a way they can consume gasoline through their mouths, you see.

Mr. MAVROULES. Have you had any severe disruptions in Maryland?

Mr. GOLDSTEIN. No. Right now the gasoline stations are staying-

Mr. Mavroules. Right now it is very favorable, I can appreciate that.

Mr. GOLDSTEIN. All winter the gasoline stations that would normally close at 5 o'clock are open now till 10, 11, and 12 o'clock. They have got product and they have got to sell it.

Mr. MAVROULES. Do you have any stations opened 24 hours a day and Saturdays and Sundays?

Mr. GOLDSTEIN. Yes, sir.

Mr. MAVROULES. What percentage of your stations are opened? Mr. PRICE. Perhaps I could answer that, Mr. Mavroules.

Mr. BEDELL. Excuse me, would you please identify yourself for the stenographer?

Mr. PRICE. I am Arthur Price, chief of Motor Fuel Inspection for the State of Maryland, comptrollers office.

Mr. BEDELL. Thank you.

Mr. PRICE. We don't keep a head count of the number that is operating but one major oil company insists that their entire universe be operated 24 hours a day, 365 days a year.

Mr. MAVROULES. I am not taking the part of the oil company so please don't misconstrue the intent of my question.

Mr. PRICE. A considerable number.

Mr. MAVROULES. Could you, for the record, get that number for us, sir?

Mr. PRICE. We certainly will, sir.

Mr. MAVROULES. I have got two other quick questions. Your divorcement law includes small refineries-H.R. 1362 excludes them from the divorcement provision, would you care to comment on that or give an opinion on it?

Mr. GOLDSTEIN. I would like Mr. Price to answer you. Mr. Price has had experience working with oil companies and now he is working in our office, so he has had both experiences.

Mr. PRICE. A typical example, I think, sir would be Mary Hudson. Mary Hudson acquired a chain of service stations-operates a chain of service stations scattered throughout various portions of the country. She acquired a refinery not too long ago in the