A new endangered species has been identified in House and Senate hearings -- the independent corner gasoline service station.
The House Small Business Committee has approved a bill sought by the Service Station Dealers of America, representing independent dealers who sell name-brand gasoline, to prevent the big oil companies who supply the gasoline sold in the dealers' stations from undercutting them by selling lower-priced gasoline at company-owned stations.
The Senate Judiciary subcommitee on antitrust approved a similar prohibition on Tuesday.
The House and Senate votes are considerable victories for the 60,000 members of the Service Station Dealers of America, who have worked hard to establish themselves as threatened symbols of the American Way of Life.
Their campaign provides an early glimpse of the fierce infighting that will break out next year in anticipation of the end of federal price controls on crude oil next October.Decontrol would pit a half dozen different groups of gasoline marketers against each other -- from Exxon to the small businessman in the corner station -- without the network of regulations that have ruled gasoline competition during the 1970s.
Jack A. Blum, representing a competing group of gasoline dealers, said the bill will hurt consumers by keeping inefficient, unecomonic stations in business. Government regulations have prevented the oil companies from responding to changes in consumer demands, and when those regulations expire a year from now, only the fittest will survive, he said.
"The strongest supporters of the bill know that their operations cannot survive in the present market once controls are ended," Blum testified recently.
Even with regulation, the gasoline market has changed dramatically during the decade. The number of service stations plummeted, with the heaviest toll among the independent "branded" dealers who belong to the Service Station Dealers Association, so-called because they sell gasoline under the name brand of their supplier -- Exxon, Texaco or Gulf, for example. Of the 300,000 stations in operation in 1970, more than 100,000 branded dealers closed their doors during the decade.
The issue is, who or what is to blame -- the big oil companies, the wholesale jobbers who distribute gasoline from refineries to retail stations, government energy regulators, or the radical change in motorists gas-buying attitudes during the 1970s?
The bill understandably is opposed by the major oil companies, who could continue to own service stations but would have to lease them to private operators if the bill passed. A comparable "divorcement" law has gone into effect in Maryland.
Opponents include the Independent Gasoline Marketers Council (the dealers who sell gasoline that does not carry the oil companies' brand names) and the associations of large and small refiners. It also is watched warily by the politically influential National Oil Jobbers Council, whose members have been moving increasingly into gasoline marketing, confronting the independent dealers with a new threat.
The jobbers persuaded the antitrust subcommittee, headed by Sen. Howard H. Metzenbaum (D-Ohio), to delay a vote by the full committee until after the jobbers had one more chance to testify, and a key part of the bill will have to be scrapped if the jobbers are to be placated.
So far, service station dealers have done well.
The bill passed by the House Small Business Committee this summer would force the 16 largest oil refiners to give up direct operation of service stations and would provide two other levels of protection: A "rack-pricing" rule would prohibit refiners from charging different prices to different customers if they are purchasing similar quantities of gasoline or oil products at the same time and place. This would prevent jobbers from automatically receiving a lower, discounted price -- a major competitive edge that is hurting the retail gasoline dealers.
Secondly, dealers would be free to buy gasoline from a supplier -- not just the oil company who owns the service station and whose brand name is on the station sign. This rule is aimed specifically at oil companies that forbid dealers from buying from other suppliers for resale.
The dealers' hero is Rep. Berkeley Bedell (D-Iowa), who led the push for the legislation. Bedell says he became aware of the issue 20 months ago after hearing complaints from Iowa dealers whose suppliers had tried to stop them from selling gasohol and who complained their rents were being doubled by the major oil companies.
At their association's annual meeting this year, the dealers pledged $20,000 in individual contributions to Bedell's campaign. As W.H. "Bill" Ligon, a Texas dealer, said in a recent newsletter, "This is the man that is fighting to get the divorcement/rack-pricing bill passed this year and he needs our help . . . with money . . . . We ask that you give a minimum of $10."
Ligon says the dealers are being backed to the wall by the major oil companies. In Austin, independent dealers have to pay $1.09 a gallon to Texaco for gasoline -- and are losing business to Texaco-owned and operated stations who are charged only $1.05 a gallon by the parent company, he says.
Bedell never asked for the financial support, says Jack W. Houston, the long-time spokesman for the Service Station Dealers. Houston notes that Bedell took up the issue more than a year before the pledge was made.
"He was about as surprised as a boy with a new bicycle" when the pledge was made, Houston said.
The dealers were just fighting fire with fire, he added, saying Bedell faces tough competition from a candidate backed by the oil companies.
That candidate is Clarence Carney, a Republican state legislator from Iowa. To overcome Bedell's advantages as the incumbent, Carney says he hopes to spend $250,000 on the campaign -- a large amount for the congressional district. To meet the budget, contributions from oil companies are being accepted, his staff says.
So far, they have received $1,000 contributions from the political action committees of Amoco and Sun Oil Co., a $350 contribution from Mobil's political committee and $200 from the Sun Oil Co. committee.
Bedell says he has received about $10,000 from the dealers at last count.
The majors say it is patently unfair to condemn them all when many have shown no interest in competing directly against the independent branded dealers. In fact, many of the 16 majors have been selling their company-operated stations, not adding to the number, said Michael E. Canes of the American Petroleum Institute, the oil industry lobby.
The firms currently covered by the bill are Atlantic Richfield, Cities Service, Conoco, Exxon, Getty, Gulf, Marathon, Mobil, Phillips, Shell, Standard Oil of California, Amoco, Sohio, Sun, Texaco and Union. All produce 30 percent or more of the crude oil that they refine into gasoline and other petroleum products, the main criterion in the bill.
The decline in the number of independent dealers shouldn't be blamed on the big oil companies, contended Paul D. Collier, and Amoco vice president. He said the problem is a drastic change in consumer attitudes following escalation of gasoline prices. Independent dealers traditionally earned half their income from such nongasoline sources as auto repairs and tire sales; today's cars need fewer repairs and their tires last longer.
Moreover, there is increasingly tough competition from expanding numbers of gas-and-go stations that offer no repair services, said Collier.
Finally, federal energy regulations have helped jobbers get a large share of the gasoline marketing business at the expense of the independent dealers.
Robert Pierepont Jr., retail business manager for Exxon, said the company operates only 700 of the 7,000 stations it owns nationwide. (A total of 20,000 stations sell the Exxon brand.) The 700 are valuable to Exxon as training sites for new station operators, and putting Exxon out of the direct sales business would just lessen competition, he said.
"It's true you can't generalize about all 16," Houston agreed. But companies that have moved aggressively into direct sales will be in a strong position a year from now when government price controls on crude oil are lifted and the other companies will have to follow suit, he predicted.
Texaco, for example, has starteed 18 new, high-volume, company-owned stations in strategic locations around Atlanta since February, said Houston. s