The Vice President of a Kansas oil company that operates 225 independent gasoline stations in 27 states came to Washington yesterday to proclaim that Energy Department price and allocation regulations are putting him out of business.
The Energy Department agreed.
"I'm in Washington because my company is being destroyed by the Department of Energy," said R. J. Gaffney, vice president of Highway Oil Inc. of Topeka.
"He's right," said a top official in the Energy Department, asking not to be identified because of his agency's mounting image problems. "He has given an accurate description of what DOE regulations are doing to some people in this industry."
Gaffney charged that one of the problems with getting the department to grant relief is the "5,000 plus backlog . . . they are buried under. DOE hasn't even looked at our papers."
Gaffney said that, at DOE's encouraging, Highway Oil invested $300,000 in gasohol production facilities."Now we need gasoline to make it work," he said, and the DOE won't let him get it.
"That's true, too," said the DOE official. "The only answer is to get rid of these regulations. There is no way they can work. They don't protect consumers, and they never have."
Some other top DOE officials, including Energy Regulatory Administration head David Bardin, had testified earlier this year that the potential existed for the regulations in question to impose unfair burdens on certain companies.
The various oil price and allocation regulations were established during the early 1970s to ensure that independent oil refiners had access to crude oil and to preserve competition at all levels of oil distribution.
Critics argue that the rules have accomplished just the opposite, and that, with the gradual deregulation of domestic oil prices, the problem is growing worse.
Gaffney said his company is "far more efficient at what we do than any major company could possibly be," but that, because of complex DOE price and allocation regulations, "We have to sell our product for 8 to 10 cents more than the majors and they, by DOE regulation, must sell their product at levels designed to drive us out of business.
"If it keeps up," Gaffney said, "we will be out of business in a few months."
Highway Oil's wholesale prices have jumped 60 to 70 percent since last year, he said, but his major competitors have been able to keep prices "just below ours."
Further, Gaffney said the major oil companies "will not let us buy their products directly from them at the refinery level, and we are stuck with very high-priced independent suppliers.
"We are tied to the high-priced suppliers by the price and allocation regulations. DOE seems powerless to control their prices or to get us alternative sources of supply," he said.