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ALEXANDRIA, Va.--The National Association of Convenience Stores (NACS) urged Congress to avoid enacting hasty policies and to use caution when considering new proposals for which the effects on the market and the American consumers may not yet be fully understood.
“Our industry understands and shares consumer frustration with escalating gasoline prices,” wrote NACS President and CEO Henry O. Armour in the letter that was distributed to Congressional offices on Friday, April 28. “(A)s you face pressures to ‘do something’ to address high gasoline prices, I write to offer our assistance in your efforts to better understand the retail gasoline marketplace.”
“Even though our industry is severely and negatively affected by rising gasoline prices, we caution Congress against enacting hasty policies without fully investigating the affect such action may have on the market. These policies can further disrupt the market, prolonging the negative affects of supply and demand imbalances and extending the economic hardship experienced by American drivers and retailers,” Armour said.
Armour said that NACS is prepared to assist Members of Congress to develop policies that promote a more stable environment for retailers and consumers in the long term and will cooperate to the fullest extent possible to provide relevant information to help Congress better understand what is occurring in the retail gasoline business.
The composition of the gasoline retail industry may be a surprise to most Americans, noted Armour in the NACS press release. He said in the report that the strong profits announced by the major oil companies, which are derived from oil exploration and production and refining operations, are not enjoyed by the station selling a specific brand of gasoline.
“Despite canopies that promote a specific brand of gasoline, very few of the country’s convenience stores--fewer than 3 percent--are owned and operated by one of the integrated major oil companies. It is much more likely that the business is owned by an independent entrepreneur who lives in the community and simply entered into a supply contract with a refiner, similar to what some restaurants do with regards to the brand of soft drink they sell,” said Armour in the press release.
Armour noted in the letter to Congress that while “gasoline may drive customer traffic to a store, it does not drive profits…The fact is, on average approximately 90 percent of the retail price of gasoline is determined before it leaves the refinery.” He reported that when prices rise, retailer margins typically fall, and that has been the case over the past month as already slim retail margins dropped more than 5 cents per gallon, “resulting in a growing number of retailers losing money on every gallon they sold.”
“Congress should take the appropriate time to conduct oversight hearings of marketplace activities and legislative proposals. Congress must collect relevant economic data to understand current conditions and the potential affect of policy proposals. Only through such a responsible process can Congress develop strategies that will benefit consumers in the long term,” Armour said. “If there is anything we can do to assist your efforts to effectively represent the interests of your constituents, please do not hesitate to let me know,” he concluded.