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PETROLEUM MARKETERS SEEK HALT TO ANTI-COMPETITIVE PRACTICES; ULTIMATE LOSERS WILL BE CONSUMERS, GROUP SAYS

 PETROLEUM MARKETERS SEEK HALT TO ANTI-COMPETITIVE PRACTICES;
 ULTIMATE LOSERS WILL BE CONSUMERS, GROUP SAYS
 WASHINGTON, May 6 /PRNewswire/ -- A dangerous trend is developing in the American gasoline marketplace, a Senate subcommittee was told today, and if it is allowed to continue motorists will pay for it in the form of decreased competition and higher prices at the pump. The danger for consumers, a spokesman for the Petroleum Marketers Association of America (PMAA) told the Senate Judiciary Committee Subcommittee on Antitrust, Monopolies and Business Rights, is that major oil companies are increasing their retail share of the gasoline market, and are doing so directly at the expense of independent marketers and service station dealers.
 "If independent marketers are driven out of business by anti- competitive practices of the major refiners, then competition will be reduced substantially, and consumers will be paying higher prices," PMAA President L.W. Locke told the subcommittee.
 The problem, Locke said, is that many major oil companies have been charging their independent marketers and dealers a higher wholesale price than they charge at the retail level at their company-owned outlets. That practice, said Locke, renders efficiencies meaningless, and while independent marketers have historically been the most efficient operators in the gasoline marketplace, "what they can not do is to sell gasoline for less than what they paid and stay in business," he said.
 The potential for monopolistic practices in the oil industry is strong, Locke said. "The petroleum marketing industry is one of the few industries, if not the only one, where the manufacturer of the product competes directly with his wholesale customers. The refiner controls not only the cost of the product at the wholesale level but also the price the product is sold for to motorists," he noted.
 "The implications of a marketplace controlled by only a few large integrated oil companies are not good for the American consumers," warned Locke. He said that in virtually every country where the market is controlled by major oil companies that consumers pay for it in the form of higher prices and fewer competitors. He noted that while the average gross margin for U.S. retailers was 12 cents-per- gallon in 1991, the margin in Canada was 34 cents, while it was 35 cents in the United Kingdom and 30 cents in Germany. The lessen, he cautioned, is clear: fewer players in the market results in higher prices.
 Locke called for passage of the Petroleum Marketing Competition Enhancement Act, S. 2041, introduced by Sens. Charles E. Grassley (R-Iowa) and Dale Bumpers (D-Ark.), and the House companion bill, H.R. 2966, introduced by Reps. Mike Synar (D-Okla.), Tom Bliley (R-Va.), Norm Lent (R-N.Y.) and Jim Cooper (D-Tenn.). That bill would prohibit major oil companies from charging their wholesale customers a price that is higher than the company's own retail outlets in the same geographic area, minus the cost of doing business. It would also prohibit the majors' from engaging in coercive practices toward their independent marketer class of trade.
 PMAA is a federation of 44 state and regional trade associations, representing more than 10,000 small and independent motor fuel and heating fuel retailers. Collectively, those marketers sell more than 45 percent of the gasoline, 60 percent of the diesel fuel and 75 percent of the home heating oil consumed annually in the United States.
 -0- 5/6/92
 /CONTACT: David L. Morehead or Phillip R. Chisholm of the Petroleum Marketers Association of America, 202-331-1198/ CO: Petroleum Marketers Association of America ST: District of Columbia IN: OIL SU: LEG


IH -- DC012 -- 6975 05/06/92 10:11 EDT
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Date:May 6, 1992
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