I have experienced other situations where the dealer was told that the company no longer wished to continue doing business at a particular site and offered the station for sale to the dealer. In two of these instances, the oil companies involved, Gulf and Arco respectively, informed the dealer of the price at which they were willing to sell the station. The dealer really had no opportunity to negotiate the price but was given the price on a take it or leave it basis. Naturally, we are accustomed to these negotiations with the major oil companies since most of their leases and dealer supply agreements are presented on a take it or leave it basis, and the independent dealer really has little, if any, bargaining power. Consequently, we are in full support of H.R. 1362 as it seems to demonstrate a very clear understanding of the problems being experienced in the service station industry and has provided very significant corrective measures. The Ocean State Service Station Retailers Association is a small association when compared with other associations throughout the country and consequently, we have very limited resources available to us. However, if there is specific information or surveys which your Committee would like, please advise us and we shall be happy to devote what resources we have to obtaining the information you desire. In our view, decontrol has merely transferred the power to determine supply allocations from the Federal Government to the major oil companies. With respect to price decontrol, we expect that service stations would be affected to the extent that the company owned stations will be selling for less to themselves than to their franchise dealers and oil companies will be giving greater and greater discounts to jobber owned stations. Thus effectively eliminating competition in the market place. I suppose a significant question remains as to how the oil companies can justify their practice of selling the same gasoline, in the same quantities, in the same areas, for widely different prices. Your continued understanding and interest concerning the plight of the service station operators is deeply appreciated. We are somewhat frustrated however that your colleagues in the House and Senate have demonstrated a resistance to the obvious need for legislation in this most crucial area. Perhaps a more cynical person would be led to comment that the lack of interest or understanding by a majority of those members of the House and Senate in this area is directly proportionate to the amount of money spent by the major oil companies in their political action committees in lobbying against this type of legislation. Thank you for your consideration. ANM: dap Yours very truly, MONTAQUILA & DEFALCO Arnold N. Montaquila The Rocky Mountain Oil & Gas Association is an industry trade association representing over 700 member firms engaged in petroleum exploration, production, transportation, refining and marketing operations in eight states. We write in opposition to the legislative proposals contained in HR-1362 which has been referred to the House Small Business Energy, Enviroment and Safety Subcommittee. The barriers and restrictions to the gasoline market contained in HR-1362 would cause a widespread disruption of the marketplace in which the consumer would suffer. This proposed legislation discounts the interest of the consumer by promoting a non-competitive environment. There are no convincing argument s that a legislated marketplace increases supply, reduces prices, or improves service; to the contrary, a decade of controls clearly demonstrates opposite. the Petroleum marketing is one of the most highly competitive and le as t concentrated industries. Figures released by the American Petroleum Institute show that 80% of the current 153,000 service stations are owned or operated by local independent business people. According to the Lundberg Letter, the nation's largest marketer holds a small 7.7 per cent of the total market share. There are ten companies whose 1979 national market share ranges from 7.7 per cent to 3.0 per cent. The ten largest marketers together account for less than 57 per cent of gasoline sold national ly. This clearly indicates that 8 dangerous concentration of economic power does not exist in the marketing of gasoline. RMOGA is opposed to further governmental regulation of the marketplace. Title III of the Petroleum Marketing Practices Act mandated a study of alleged refinery subsidization of gasoline marketing. The study concluded the price and allocation regulations of the Department of Energy were the most anticompetitive factors operative in the gasoline market. With President Reagan's recent order to decontrol gasoline prices, the market has been exposed to the spirit of competition for the first time in eight years. Any action on HR-1362 would only return the market to an environment of stiffled competition. Congress should not attempt to insulate those groups in the marketing of gasoline who do not wish to be exposed to the competitive forces of fered by decontrol. For this reason we solicit your opposition to HR-1362. Sincerely, еп "Stubbs D. R. Stubbs Chairman RMOGA Marketing Committee DRS/ck EXHIBIT 6 TEXAS SERVICE STATION ASSOCIATION P.O. BOX 9445 W. H. LIGON, Austin Congressman Berkley Bedell 2440 RHOB Washington, D.C. 20515 Dear Congressman Bedell: I would like to have this statement and the exhibits attached entered as a part of the hearing records on HR 1362, which was held on April 1,1981. We have been faced for many years with dealers having to compete with jobber operated stations. This method of competition has led to many thousands of branded dealers going broke and withdrawing from the marketplace. We don't believe that any dealer can compete with jobber and company operated stations, when these competitors have from a 44 to 7¢ better buying price for the same product. I have set out below some examples of this type of competition from jobber operated stations and have attached exhibits of pictures of these jobber outlets with invoices from dealers of the same brands. |