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    PMAA Tenders Below-Cost Bill

    Proposal targets high-volume gasoline retailers.


    ARLINGTON, Va. -- Spearheading a statewide campaign against retailers who sell gasoline "too cheap," the Petroleum Marketers Association of America (PMAA) expects within days to enlist Republican and Democrat senators to introduce a federal below-cost bill.

    Aimed at halting the alleged practice of some major retailers from selling gasoline below their wholesale costs, the organization that represents mom-and-pop distributors recently drafted the Petroleum Conservation and Competition Act of 2002.

    PMAA President Dan Gilligan told CSNews Online that his organization has spent the past couple months working with U.S. senators to build support for the measure. "I?m exhausted explaining to them why this is good for the marketer and why this is good for the consumer," he said.

    Similar provisions exist in a dozen states and eight others are considering outlawing below-cost gasoline practices. While such provisions vary by state, PMAA?s proposal is modeled after the highly successful Alabama statute that last year forced Murphy Oil to hike its retail prices and pay a fine.

    In recent days, the legislature of Virginia has taken up a similar bill. That one, endorsed by the Virginia Petroleum Marketers and Convenience Store Association would preclude retailers from selling gasoline below their wholesale costs. PMAA?s version defines below-cost as a price lower than the lowest terminal rack price plus freight and federal and state taxes. In general, freight adds another one to two cents.

    Gilligan said he expects full support from the Service Station Dealers of America and hopes to garner support from two other key downstream petroleum/convenience store groups -- The National Association of Convenience Stores and the Society of Independent Gasoline Marketers. The two associations had previously taken no formal position on a below-cost statute but have agreed to revisit the issue.

    The climb to enactment is fraught with obstacles. Major business organizations, as well as U.S. oil supermajors and large retailers like Wal-Mart and Costco, are certain to weigh in on the opposite side.

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