WASHINGTON – Congress should focus on two elements that can have a lasting, positive impact on gasoline market conditions: increase oil supplies and enact H.R. 5546, the Credit Card Fair Fee Act, said NACS 2004-05 Chairman Bill Douglass, CEO of Douglass Distributing Co., in testimony before Congress this morning.

“Crude oil now represents about 72 percent of the retail price of gasoline – higher than at any other time in history,” Douglass told the House Judiciary Committee’s Anti-Trust Task Force in the Hearing to Examine the Consumer Effects of Rising Gas Prices. “If substantial inventories of additional crude oil were brought onto the market, basic economics tells us this would have a deflationary effect on crude oil prices. But perhaps even more importantly, such an increase in oil supply would send a signal to the non-commercial market traders.”

Douglass said that a significant factor influencing crude oil prices has been the entry of commodity investors seeking a safe haven from the volatility of the real estate and stock markets. This huge influx of capital has violated the traditional supply-demand equation and grossly inflated fuel prices.

“With additional supplies, it is conceivable that non-commercial investors would begin to transfer their speculative capital away from the crude oil commodities market and invest in markets with more favorable long-term economics,” said Douglass.

Douglass also urged Congress to enact H.R. 5546, the Credit Card Fair Fee Act, which would give retailers the ability to negotiate with Visa and MasterCard. “The Credit Card Fair Fee Act is critical legislation that could help reduce the financial burden facing retailers and provide them with the opportunity to remain competitive in the market. Many more of my dealer customers would be able to cover their expenses if they were not forced to turn over more than half of their gross fuel margin dollars to the credit card companies,” said Douglass.

Douglass also educated Congress about the workings of the convenience and petroleum retailing industry. “Our industry is dominated by small businesses,” said Douglass. “Nearly 60 percent of convenience stores are owned by individuals that operate just one store…When you read the earnings reports released by the major integrated oil companies, remember that your neighborhood convenience store is not sharing in those profits. In fact, last year the average convenience store made about $23,000 in profit.”

Between margins at historic lows and credit card fees at historic highs, Douglass warned Congress that “the number of retailers on the brink of bankruptcy is now at a dangerous level. In fact, in the past four months, 10 of the dealers to whom I supply motor fuel have handed me the deeds to their business. They are so leveraged that the slim margins they make on their sales cannot service their financial obligations. This is a serious situation – retailers are being forced out of business because they are unable to pass through the increasing costs of inventory and operating expenses."