ALEXANDRIA, VA -- There was a lot of action this week on issues that affect the small business community and our industry directly and indirectly. Sometimes it feels like we are just trying to keep up:

Oil Company Mergers
This week the Senate Judiciary Committee held a hearing investigating the impact of oil company mergers on the petroleum market. Chairman Arlen Specter (R-PA) has introduced legislation that would prohibit oil and natural gas companies from withholding supplies to manipulate the market, place additional restrictions on oil company mergers, commission another Government Accountability Office study on the effect of mergers, and authorize the prosecution of OPEC under U.S. anti-trust laws.

Testifying under oath on behalf of the industry were CEOs representing ExxonMobil, ConocoPhillips, Chevron, Valero, Shell and BP America. Each noted that mergers had effectively increased access to oil and natural gas, improved the competitive ability and financial performance of each company, and promoted efficiency in the system. They all called for greater access to oil and gas resources and for regulatory assistance from the federal government to satisfy existing and pending requirements that could complicate their operations.

Members of the Committee were somewhat divided in their opinion of the industry’s behavior, with some accusing the companies of manipulation and others reminding the Senate that profits were not illegal, for any industry. Chairman Specter noted that his legislation had bipartisan support, but that the committee’s agenda was already full this year, leaving to speculation the future of the bill.

As could be expected, Senator Charles Grassley (R-IA) asked the companies about reports he has received that the majors are refusing to provide Midwest retailers with supplies of E-85, an 85 percent ethanol fuel blend. The majors testified that more testing needs to be done on E-85 before it can be marketed on a large scale, to which Grassley noted that Ford is already promoting its E-85-ready flexible fuel vehicles on a large scale and suggested that should satisfy their concerns about testing the product.

Ethanol
Despite the cautions expressed by the oil industry, this week Sens. Richard Lugar (R-IN) and Barack Obama (D-IL) were expected to introduce legislation that would call on oil companies to make E-85 available to consumers. In a statement on Lugar’s Web site, he comments, “If these companies do not take advantage of the incentives Congress has provided, I would be in favor of legislation mandating that they install E-85 pumps in appropriate markets.” Lugar also mentions that the bill would create an alternative diesel fuel standard compared to the renewable fuels standard he “helped put into the 2005 energy bill.”

NACS believes that the transition to an ethanol-supported petroleum industry must proceed at a market-driven pace, as much as might be possible in the current regulatory environment. After Congress last year mandated that the industry phase-in a 7.5 billion gallon renewable fuels standard by 2012, it should not seek to layer yet another mandate on top of this newest requirement. The push for E-85 is being helped by announcements of the auto industry that more and more E-85 compatible vehicles are being delivered to market. But there is already a challenge to supply the market with sufficient supplies of ethanol blended at 5 and 10 percent. Putting additional pressure on the market will only result in problems that will be paid for by consumers.

Promoting renewable fuels is laudable and convenience stores across the country are making the necessary adjustments to do just that, when and where it makes sense.  Force-feeding the public with a product that is not ready for prime-time will simply saddle consumers with elevate prices and a more fragile supply and distribution system. Washington must not chase one mandate with another…let the market work.

Lobby Reform
In other news, the Republican House leadership announced that draft legislation on lobby reform and accountability is circulating among representatives today. Rules Committee Chairman David Drier (R-CA) was tasked by House Speaker Dennis Hastert (R-IL) to craft the bill, which Drier says provides “real reform and real changes.” Meanwhile House Democrats are already denouncing the bill, including Minority Leader Nancy Pelosi (D-CA), saying the reform package is “all talk and no action.”

From what we know of the bill, which I remind you is a draft, language that would close the tribal loophole we’ve been discussing in previous Washington Reports is not included. Some key provisions that will likely raise some of contention among members of Congress are imposing restrictions on independent 527 political groups by forcing them to comply with Federal Election Commission limits; and suspending all privately funded travel by members of Congress throughout the remainder of the current congressional session. This final provision will provide the ethics committee with time to establish a pre-approval system for such trips in future years.

Meanwhile the Senate lobbying reform bill hit a roadblock on its way to the floor in lieu of the Dubai ports controversy. Rumor is that the bill will not be put back on the schedule until some time after the weeklong St. Patrick’s Day recess that begins Monday, March 20.

Health Care
The Senate Health, Education, Labor and Pensions Committee on Wednesday passed on a party-line vote a bill authored by Chairman Mike Enzi (R-WY) designed to help small businesses provide health insurance to their employees. Chairman Enzi has been working with small business interests and the insurance companies to resolve the differences between the two concerning the proposed authorization for associations to offer health plans to their members. Many small business organizations support Chairman Enzi’s new proposal and the insurance companies have acknowledged that it is an improvement, but still has some problems. The Chairman hopes to bring the bill before the Senate for a vote as soon as possible.

That is all the news that is fit to print this week. Have a great weekend.

John Eichberger
Vice President, Government Relations