A. 10. Q. A. 11. Q. NUMBER OF SERVICE STATION DEALERS ARE UNFAIR- Convenient Access to Service! Consumers will lose the convenience of trading with a local dealer who is in business to meet his total automotive needs from gasoline to tune-ups to minor and major repairs. Full service dealers will not be available to provide the fast, convenient, and lower cost minor mechanical services, which the consumer knows to be the most effective involving the least loss of time and the lowest overall cost. WHAT EFFECT WILL ENACTMENT OF DIVORCEMENT/ None! Refiners have historically earned good profits upstream from retailing in crude oil production and refining. In fact, retailing is considered a drain on a refiner's upstream profits, in a competitive marketplace; and, their stockholders should not tolerate a major sector of the firm, which does not earn an adequate return on its investment. If this were clearly known to the average stockholders, they would insist that a firm remove itself from retailing and devote its best efforts to those parts of the firm's business that will earn a higher return. Thus an emphasis on production and refining to maximize its return will result in adequate supplies being available to the public and probably at a lower cost otherwise. WHAT EFFECT WILL ENACTMENT OF DIVORCEMENT/ A. Competition will be enhanced! The consuming public will benefit in many ways from the increased competition of many independent dealers operating in the climate of basic fairness that will result from the passage of this legislation. In contrast, without this legislation there will be fewer stations and less competition after refiners and jobbers have forced most dealers out of the marketplace. 12. Q. A. ARE REFINER AND JOBBER DIRECT EMPLOYEE-OPER- No! Lower prices at refiner and jobber direct employee-operated stations are not justified by operating cost efficiencies in com 13. Q. A. 14. Q. A. parison to comparable dealer operations, but are supported by upstream profits and/or the higher wholesale prices charged to their captive branded dealers and/or the advantage of a lower buying price as a jobber, notwithstanding the intent to sell that product at retail. WILL ENACTMENT OF DIVORCEMENT/ANTI-COMPETI- No! To the contrary, easier entrance will be encouraged and improved competitive conditions will be epxerienced for the consumers' benefit. There is nothing in the legislation that provides any assurance any dealer will remain in business... only that all dealers will have a basic and reaonable fair opportunity to be competitive (with a starting price) with other gasoline retailers. If some dealers can match or beat the efficiencies and services offered in the marketplace by other dealers, the more efficient dealers will survive and the inefficient will not survive. WHAT EFFECT WILL ENACTMENT OF DIVORCEMENT/ A Positive Effect! Unless fairness is restored so as to permit and enable full service (and self-serve) dealer operated stations to compete in motor fuel (gasoline) sales, services with gasoline will disappear and the comfort, convenience and ability of consumers to travel by automobile will be seriously handicapped by extreme delays and higher costs. The public safety and welfare will be adversely affected. Senior citizens and the disabled will not be able to obtain needed services at low prices at conveniently located stations throughout America. 15. Q. DID THE UNITED STATES SUPREME COURT REJECT THE MARYLAND STATE DIVORCEMENT LAW AS ANTICOMPETITIVE? A. No! The Court said the same thing about the Maryland State 16. Q. A. law or whether it was anti-competitive in its opinion, but only that it was constitutional to enact such law to provide relief from practices the Maryland State Lawmakers considered to be wrong. WHAT STATES HAVE ALREADY ENACTED LAW TO Washington, D. C. Effective January 1, 1981 Refiner operation of retail stations are prohibited; Maryland and Connecticut - Divorced Refiners from employeeoperated retail stations; Delaware Prohibits refiners from employee-operated retail stations (exception on turnpikes); -- Virginia Declared moratorium on refiner employee-operated stations; Georgia - Prohibits jobbers from selling at retail in their employee-operated retail stations any gasoline the jobber purchased as a jobber at jobber discounts. (Constitutionality test now in 5th Circuit on appeal - lower federal court [Atlanta] found constitutional.) 17. Q. ARE REFINERS OR JOBBERS TRUE COMPETITORS AT RETAIL, WHEN THEY CONTROL WHOLESALE SUPPLIES TO DEALERS; CONTROL WHOLESALE PRICE CHARGED DEALERS, AND, CONTROL DEALERS WHO ARE REQUIRED BY CONTRACT TO PURCHASE THAT PRODUCT? A. No! Refiners and jobbers who have used their upstream advantage to compete with dealers at retail by selling at retail at a price that does not cover the wholesale price charged dealers and the cost of employee-operating the retail stations are not competitors in the true sense. They are predators (either intentional or not) engaged in unfair marketing practices and they are destroying competition and small business in the gasoline industry. 18. Q. A. WHAT EFFECT WILL ENACTMENT OF DIVORCEMENT/ A Positive Effect! Job opportunities will be preserved and will increase for skilled, semi-skilled and unskilled workers, for young people needing part-time or full time employment, and for small business entrepreneurship opportunities. The local and national economy will be benefitted advantageously. 19. Q. A. 20. Q. A. IS DIVORCEMENT LEGISLATION NECESSARY IN ADDI- Yes! Divorcement is necessary to protect the marketing segment of the oil industry from the excessive control by a few refiners who would control marketing as they now control all other segments... they control: 93% of the Nation's proven domestic crude oil; 80% of refining capacity; 90% of crude oil pipelines; and more than 75% of the finished product pipeline capacity. By 1990 there will be (by one major oil company's estimation) an 18% reduction in the consumption of motor fuel. With a greatly reduced market for refined product, refiners could be expected to take whatever steps are necessary to gain a larger share of the retail market. One possible move by the refiners would be to greatly increase the subsidization of marketing through direct stations in order to increase refinery runs to economic levels of operation and thereby increase their overall profitability. The fact that this trend is already underway is evident from the increased emphasis on marketing by the big oil companies. Capital spending on marketing increased 23% in 1979; 26% in 1980; and is projected to increase 29% in 1981 (over the previous years). WHAT AUTHORITIES HAVE EXAMINED RETAIL MAR- TION? Partial answer includes (1) "FTC Report on Anti-competitive Practices In The Marketing of Gasoline" (1965 Hearings), June 30, 1967; (2) "House Small Business Committee Report on Problems of (3) "Petroleum Marketing Practices Act of 1978," Title III, (5) "House Small Business Subcommittee on Antitrust and 79-549 0-81--32 (7) "Big Oil: A Citizen's Factbook on The Major Oil Companies," Center for Science In The Public Interest, 1973; 1974; (8) Allvine/Houston/Phillips, "The Case for Legislative Relief From The Impending Destruction Of Small Business And Competition In The Gasoline Industry." Georgia Association of Petroleum Retailers, January 22, 1980; (9) D.O.E., Office of Competition, Part I, Title III Report, May, 1980 and J. W. Wilson & Associates, Inc. Economic Counsel, Washington, D. C., “Report On Part I The State Of Competion In Gasoline Marketing; The Effect of Refiner Operations at Retail," September, 1980; and transcript of all related Hearings. (10) Small Business Administration's contracted Final Report from the Institute of Public Administration, Washington, D. C., "An Analysis of The Department of Energy's Fuel Allocation Plan and Related Policies," particularly pages 110-117 and especially page 115, 3rd paragraph and 1st sentence on page 116, June 1980: recommending divorcement of refiners and jobbers from retailing .... and, that decontrol not be allowed until divorcement law is in place. (11) Testimony on legislation by the National Association of Small Business; (12) Testimony on legislation by the National Federation of Independent Businesses; (13) White House Conference on Small Business, 1980; (14) American Petroleum Institute, testimony by Mr. Paul D. Collier before U. S. Senator Howard Metzenbaum's Subcommittee, openly admitted the retail marketing system as it was designed by refiners and as it exists today is a disadvantage to the independent branded dealer stations. The admission by the representative of API is significant in that it succinctly identifies the problem. The problem is that independent service station dealers are being squeezed out of business. (15) The Office of Advocacy, Small Business Administration, in testimony on the divorcement/anti-competitive pricing legislation said: "If we choose at this moment between no legislation and 'imperfect' legislation which does not have the equally enthusiastic support of all small business elements in this industry, it is far more important to have even the 'imperfect' legislation. We can all work to perfect it as soon as Congress reconvenes. But the longer we go without even imperfect legislation, the fewer small businesses there will be to participate in the perfecting process. " (16) Federal Trade Commission - According to The Oil Daily (November 4, 1980): Complaint filed against eight refiners (Exxon, Texaco, Gulf, Mobil, Standard Oil of California, Standard Oil of indiana, Arco, Shell) November, 1980 charges the refiners have individually and collectively: |