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WASHINGTON-- Paul Reid, president of Reid Petroleum Corporation in Lockport, New York, appeared before the U.S. House Committee on Energy and Commerce on behalf of NACS and the Society of Independent Gasoline Marketers of America (SIGMA) in the hearing “Gasoline: Supply and Price Specification,” reported NACSOnline. Reid currently serves as SIGMA’s first vice president and chairman of SIGMA’s Legislative Committee.
“There are no short-term fixes to increase gasoline supplies or dramatically reduce gasoline prices. Therefore, we urge Congress and this Committee to focus attention on options that will benefit consumers in the long-term,” he said in written testimony delivered to Congress.
Reid explained the “overwhelming majority” of retail motor fuel outlets are owned and operated by independent marketers, and that major oil companies own and operate fewer than five percent of U.S. retail locations, according to the report.
“Independent marketers do not refine gasoline or diesel fuel -- we are dependent on refiners and importers for the product we sell. Therefore, we have long supported policies that expand supplies and promote a competitive market,” he said, according to NACSOnline.
Commenting that gasoline supplies -- although tight -- are adequately meeting consumer demand, Reid suggested in the report that federal regulatory reforms are necessary to assure that additional domestic refining capacity “comes on line as quickly as possible.”
With respect to high gasoline prices, and contrary to the assumptions of some public opinion leaders, Reid clarified that retailers do not reap the benefits of higher fuel costs when prices at the pump increase. “Rising wholesale and retail gasoline prices generally do not translate into higher profit margins for gasoline retailers. In fact, the opposite is true,” he said, reported NACSOnline..
To curb current fuel costs, Reid suggested that Congress should enact a temporary suspension of the U.S. tariff of imported ethanol. “Such a tariff suspension will attract additional ethanol supplies to those markets where it is most needed,” such as the East Coast, the Gulf Coast and California, he said, adding, “Such developments will put downward pressure on ethanol prices.”
In closing, Reid highlighted industry concerns about recent legislative proposals mandating the use of E-85.
“Some independent marketers already sell E-85, and many more may do so in the future if there is demand for the product and ethanol is priced at a level that makes E-85 competitive with gasoline,” he said in the report, adding that Congress should rely on market-based mechanisms to encourage more widespread use of the ethanol-blended gasoline rather than a “command and control mandate” that would require all retailers to sell the fuel.