THE DEPARTMENT OF ENERGY has been trying diligently to simplify and improve its gasoline price controls. The first result was the cavalcade of towing trucks, driven by angry retail dealers, that toured Washington this week in protest. The new regulations, you could argue, are generally more favorable to the retailers than the old ones were. But tey are also clearer and more comprehensible, and that seems to have contributed to the protest.
Those service-station operators deserve a degree of sympathy. Some of them are prospering mightily out of the present shortages, but it remains true they are the only small businessmen in the country who are the only small businesssmen in the country who are still under price controls. Perhaps you will feel that the grounds for sympathy are not immediately visible. After all, these retaiilers were protesting a profit-margin limiit -- at 15.4 cents a gallon -- that is nearly tree times the actual margin they were averaging as recently as last January.
But the margins last winter were much too low to last. Forced down by cutthroat competition, they were less than half of the level, adjusted for inflation, that prevailed six years ago, before the Arab embargo. These margins are the dealers' gross incomes, out of which they have to pay their operating expenses. Rent, for example, was frozen in the earlier stages of the controls but has now been set free. Many of these dealers have been harshly squeezed between rising rents and declining numbers of gallons of gasoline to sell.
The dealers in the demonstration here complained that the federal controls were cruelly holding their incomes intolerably low. That's not quite right. Among the large stations with high monthly allocations, it is not unusual to find owners who make $100,000 a year. But there are others, among the small stations with heavy competition, that barely stay afloat.No uniform profit limit is going to be fair to all of the service stations.
As long a gasoline prices press the legal limits, some of the dealers are going to respond by dropping other services or charging more for them. The pleasant havib of wiping off the customer's windshield has reappeared -- perhaps only temporarily -- as the price of a gallon floats up over $1. But the free air pump seems to be turning into an endangered species. Gasoline controls have had little impact over most of the eight years that they have been in effect, because the normal forces of competition held prices well below the legal ceilings. But that happy state of affairs suddenly ended last spring, and now all the familiar distortions and anomalies are rapidly appearing -- bringing, in turn, a parade of towing trucks.