The Oil Marketer's Plight Continues

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The Oil Marketer's Plight Continues

GRAND RAPIDS, Mich. -- Dan Gilligan, president of the Petroleum Marketers Association and Hank Armour, president of the National Association of Convenience Stores, spoke about the proposed price gouging bill last Wednesday at a forum at Michigan Petroleum Association's spring conference and trade show, held at DeVos Place in Michigan, The Grand Rapids Press reported.

"The focus Congress has is not on retailers, it's on the billions being made by the major oil companies," Armour said in the report. "That's what's driving the motivation for a price-gouging bill."

Gilligan and Armor said proponents of price-gouging legislation want to stick gasoline retailers with the cost of replacing inventories after wholesale price increases.

"We're resigned to the fact we're going to get some form of price-gouging bill. It's something that you just can't vote against, so we're working on what's in the bill," Armour said. "I'm fairly hopeful that we'll see something reasonable."

Gilligan said: "How many of us believe that the majors are going to pay for E85 tanks to be installed at retailers? It's just not going to happen."

Craig Hoppen, vice president of Wyoming-based J&H Oil, said ethanol and bio-fuels were the buzz at the convention this year, explaining J&H Oil began distributing E85 at two locations with some success last May until New York state required gas stations there to sell 10 percent ethanol, the report stated. That drained ethanol supplies across the Midwest and drove up the price, he said.

"I'm against any kind of government mandate, though I do see how the government could provide some tax credits or something to encourage people to do it on their own," he said. "Eventually, there's going to be a margin on these products, too."

As for environmentally friendly legislation such as proposed requirements refineries blend 75 million gallons of biofuels annually regardless of the cost -- that could cause problems, the newspaper reported.

"History has shown that mandates create shortages, and shortages create higher prices," Gilligan said.

Meanwhile, gas station and convenience store owners continue to get squeezed. The Michigan Petroleum Association/Michigan Association of Convenience Stores' membership is barely making the industry average of a 2-cent-per-gallon profit margin, said Mark Griffin, the group's president.

"The average gas station pumps about 3,500 gallons a day. So, when you consider a 2-cent-per-gallon profit, that makes for about $70 a day," he said. "Multiply that by 365 days, and you're talking about something like $25,000 a year on a $1.5 million investment."