So they say, "OK, we will protect you," and some plan of protection may come into being. And then they move down to within 2 cents. As soon as that happens, the other party may go down. And they might get so mad and say, "I will meet him," and they drop it down to his price. As soon as that happens the independent cannot sell gasoline and he goes.

It appears to me they all go pretty rapidly down to costs, or break-even point and then everybody seems to get sensible. And then somebody will announce one morning he will try to raise gasoline prices. If all follow him, it is peaceful. If they don't, he comes back down. And then another one will try. And it will go through until it is up and down the ladder. And we have seen gasoline, I assume, where I have heard of instances where every time they delivered a tank of gasoline, they gave the man a check for selling it. Mr. KLUCZYNSKI. That answers the question. Mr. DIXON. That is competition.

Mr. KLUCZYNSKI. One more question. I remember the hearings last year or 2 years ago when a gas station operator had no business after 8 o'clock at night, we will say, and he wanted to close his station at 8 o'clock, but the people he bought the gas from wanted him to keep open until 10 o'clock.

Mr. DIXON. This may very well be the terms of his lease-the agreement of rent that he signed-that he would agree to maintain certain hours.

Mr. KLUCZYNSKI. In other words, they would have the lights on for 2 hours, and get that additional 2 hours per day for advertising. Mr. DIXON. Usually these independent lessees pay a percentage of rent say so much per gallon-like 11⁄2 cents, 14 cents per gallon. Mr. KLUCZYNSKI. Thank you, Mr. Chairman. Mr. Broyhill, have you any questions?

Mr. BROYHILL. No questions, other than to comment on your last question, Mr. Chairman-to say what starts these gasoline price wars-in some areas where I have seen them they are continuous.

Mr. DIXON. They have lasted a long time, sir, in certain areas.
One lasted up in Delaware for several years.

Mr. KLUCZYNSKI. Well, Mr. Chairman, we are very much impressed with your presence and statement here today.

I notice that the other Commissioners are here. Does anybody want to be heard, or do you have any statements for the record? Well, we will hold the hearings open for awhile. If you feel like you want to put a statement in, we would be happy to have it. I want to thank you, Mr. Chairman.

Mr. ELMAN. Mr. Chairman, I simply want to say, on behalf of myself and the other Commissioners, that we very much appreciate the committee's interest in this matter, as well as the assistance and support you have given the Commission.

Mr. KLUCZYNSKI. We are trying to cooperate with you. I know you are doing a good job, and we are trying to do a good job. It is hearings of this kind that are going to help small business.

Thank you.

(Whereupon, at 3 p.m., July 19, 1965, the subcommittee recessed, subject to the call of the Chair.)

LETTER OF TRANSMITTAL

FEDERAL TRADE COMMISSION, Washington, D.C., October 22, 1965.

Hon. JOE L. EVINS,

Chairman, Select Committee on Small Business,
House of Representatives,
Washington, D.C.

DEAR MR. CHAIRMAN: Transmitted herewith is a copy of the official transcript of public hearings before the Federal Trade Commission relating to marketing of automotive gasoline, totaling 1,751 pages, together with copies of the exhibits incorporated therein as shown in the contents' pages. In addition, I am transmitting copies of all letters, statements, memorandums or other documents contining data, views and argument submitted by interested parties during the course of the gasoline inquiry which are also a part of the public record in this proceeding.

These documents are being forwarded pursuant to the request of the Subcommittee on Distribution of the Select Committee on Small Business which, at the time, was under the chairmanship of Congressman James Roosevelt.

The cooperation and assistance which your committee has given the Commission in this matter is very much appreciated.

With kindest regards, I am,

Sincerely yours,

PAUL RAND DIXON, Chairman.

15

FTC INDUSTRY CONFERENCE ON MARKETING OF

AUTOMOTIVE GASOLINE

MONDAY, MAY 3, 1965

FEDERAL TRADE COMMISSION,
Washington, D.C.

The Commission met in public hearing, pursuant to notice, at 10 a.m. in room 532, Federal Trade Commission Building, Hon. Paul Rand Dixon (chairman) presiding.

Present: Paul Rand Dixon, Chairman; Philip Elman, Commissioner; A. Everett MacIntyre, Commissioner; John R. Reilly, Commissioner; and Mary Gardiner Jones, Commissioner.

The BAILIFF. The Honorable, the Commissioners of the Federal Trade Commission. The Commission is now in session.

Chairman DIXON. I will make this announcement before we begin. Regarding the photographers, before each witness makes his statement, there will be a short pause, during which photographers will be permitted to take picutres. Under no circumstances will pictures be taken during the making of statements by witnesses.

I understand some television cameras are out in the hall, and it is entirely up to the witnesses whether they wish to be televised or make statements to the TV people.

On behalf of the Federal Trade Commission, I welcome you to this hearing which has been called for the purpose of affording all interested parties an opportunity to present their views regarding problems in the marketing of gasoline. In the notice announcing this inquiry, which appeared in the Federal Register on December 30, 1964, and which is a part of the official record in this proceeding, the Commission invited both oral and written comments in specified areas, which include the general market structure of the industry, pricing of gasoline at all levels of distribution, the whys and wherefores of "price wars," competition between branded and unbranded gasoline and between integrated and nonintegrated refiners, and grades and qualities of gasoline. The notice also requested information on other matters relating to the marketing of gasoline.

The petroleum industry is undoubtedly one of the largest and most important segments of our national economy, which may be described as an economy on wheels. To illustrate the enormity of the industry I need only remind you that there are approximately 150 company refiners, some 30,000 terminal and bulk plant operators who make up the greatest portion of the wholesale segment, and over 200,000 retailers. The annual dollar volume of sale of gasoline at the retail level is estimated at $17.8 billion.

I am also reminded that there are some 2 million persons employed directly and indirectly in this industry, which makes up over 3 percent of our work force.