I have been a regional manager for a midwest oil company, salesmanager of a west coast oil company, had experience as a service station operator with a number of stations at one time, or the old, now extinct, superservice station, with up to 25 employees on one lot. I have had experience in the full automotive aftermarket, the TBAtire, batteries, and accessories-market, hard parts or wholesale auto parts. I have had experience in the tire business, extra heavy experience in the equipment and machinery used in the automotive aftermarket.

I wish to thank the Commission for letting an individual appear. This is real progress.

What I'll discuss is the fact that price fixing already exists and that the gas wars are not bad, that we always had them before price wars existed; they were just part of the everyday operation of business in the same manner that hamburger is available sometimes for 39 cents a pound and sometimes it is 79 cents. That is certainly a bigger field than the petroleum business.

I'll spreak in general as the market exists in Los Angeles, Calif. Everything in the automotive aftermarket, in the petroleum retailing and marketing, happens first in Los Angeles, because we sell the most gasoline, drive the most cars, make the most smog, use the most tires. So what is happening to us today will happen to other areas in 5 years or 10 years. If you wanted to know exactly the direction that the markets will go in the east, you can observe what has happened in Los Angeles.

I'll classify an oil jobber the same as an oil company. We don't have them in Los Angeles. They are extinct. They have gone with the horse and buggy. They have the same aims and the same ends of operation as an oil company-restraint of trade, price fixing and there is no difference at all. They will go in other areas in time.

I would like to say that you don't need to look further than existing conditions to prove that prices are fixed. We don't need special investigators, tape recordings, witnesses of all the outrages that have gone on. I can give many of my own experience, and they are of no importance. This is what the oil companies want to happen, to have you get really busy proving little, specific or big to the people they happened to but specific instances of restraint of trade and price fixing.

To understand that price fixing is automatic and it exists because of the position of the oil companies, you have to understand the evolution of the business. A few seconds of that would be that we are operating 1920-style service stations today in the large metropolitan areas. During the 1930's, we started to operate superservice stations. These were stations with a large number of employees, which handled major brands of gasolines, or split pump, two major brands of gasoline, or rebranded under their own name. They had an L-shaped set of buildings on the rear of a large lot. They got bigger and stronger, like the supermarkets in the food industry today. In fact, in Los Angeles, we had some that had their own private streets they were so big. They had to have a stop sign at the intersection in the middle of the premises. And a regular painted stop sign would induce -they had to get an electric one because of the traffic jam.

It

These have been wiped out to the detriment of the consumer. would have been the same as had all the meat companies gotten

together and wiped out the supermarket to keep us doing business with the Mom and Pop stores, so we could pay 20 cents more for any 50-cent item.

Price wars were always a part of the business in those days, and the incompetent, the inefficient, could not bear up under them. The incompetent and inefficient can't bear up under the marketing of food today because it is an efficient operation with a very low markup and we eat better for less money.

Now, the result of what has happened in strangulation, in restraint of trade, the financial murder of more than 2 million service station operators, this has resulted in price fixing that is automatic. It is unwritten, unspoken; it just happens to the position that is held. They operate to control the tires and batteries and accessories that are sold. They take kickbacks, they are in the process of breaking a big, valuable part of our economy, the parts manufacturers, the wholesalers, the independent parts salesmen, the tire dealers. They have no respect for free enterprise as such. They may pay for the bumper stickers that say, "Please, Uncle Sam, Let Me Do It Myself," but what we need is one that says, "Please, Uncle Sam, Be a Referee; Keep it Honest and Stop the Low Blows." I would like to talk about some of the low blows.

We have a president of an oil company in California, Mr. Hartley, of Union Oil Co., who uses the newspapers to threaten the independent retailer who cuts his price and doesn't stay within a penny of the major company's retail price, the price he would like to have. He said recently and bragged that the gas war that lasted 3 or 4 months last fall in Los Angeles did not affect the profits of Union Oil Co., right after there had been a long discussion about bringing the rebrander and the independent out within 1 cent of the majors on the retail, and the majors don't even operate retail stations; they just control them.

I'm not going to say too much for the rebranders in Los Angeles. I'm not defending them. They are on the fringe of the business. They invented self-serves out there. They are probably in other parts of the country. But now they serve the public. There is a little place for them, since the super service station business was pushed off the scene, clear out, in California. There is some bad gasoline, there is some distress gasoline, there is gasoline that has such an odor that you cannot bear it when it is being put into your cars. It goes to some of these sleazy fringe operators, people who are operators of fringe businesses. You can't get a tire changed, you can't get a battery charged; they don't even have a jack to put a spare on. They use the very distressed part of the labor market. I imagine if they could get themselves a Senator to go to work for them, they would use braceros at 75 cents. They pay $1.25.

I talked to a young man who works for them and have seen his paycheck; $240 a month. These people would not be hurt if we improved the situation.

Rebranders just occupy a particular position. They fix prices, too. They agree from time to time to stay 1 cent under whatever price the majors want. The majors tell them that they will punish them if they don't; they will have a gas war.

Their gas wars don't hurt them at all because you take the average of the sales-we had very low, depressed prices in Los Angeles, from

the middle of the summer almost to Christmas. But today, we are 3 cents higher than you and you can see the oil wells from our homes and they are next door to our service stations, with a half-cent freight or quarter-cent freight, and we are right on top of the world's largest known oil reserve in the free world. So we're collecting 3 cents extra now to make up for the 3 cents less that they collected last fall. So when they say they can still make a profit and have a gas war in one large marketing area, they are telling you the truth.

So the independents now even want to sue the major oil companies for not letting them have this particular spot, fix the price at i cent differential so they can remain there safely and have an automatic profit. The independents are in the same classification.

The men you should help, that I ask you to help, is the consumer, by freeing the retailer from the restrictions that are on him, because of the enforcers as some of them call them, the enforcers of the oil companies dealer reps the oil companies call them-calling on the dealer, controlling him completely so that the oil company talks about gas wars when they are not supposed to be concerned with them. They are not even in the marketing business, retail. They escape the unemployment compensation, shrinkages, and losses of social security and overtime, investment, theft, wear and tear and still talk about controlling the market. They have no place in the market.

I believe that we should have legislation that no manufacturer or refiner should control the retail outlet of his product unless he takes control, total control, unless he actually operates on a salary basis, that you have an automatic restraint of trade if there is any influence on the retailer by the manufacturer of butter or gasoline or meat. And there will have to be a way found to stop the oil company ownership of retail outlets without the responsibility of retailer outlets. They only use this as an excuse to escape the costs. All the oil companies tried to operate, on the west coast at least, on a salary basis and failed miserably, failed completely.

Standard was one of the biggest failing out there. They created a large chain called Standard Stations, Inc., and had to sell them all to individual dealers, individual operators.

Now, there is a heavy overbuilding in Los Angeles because we have so many mom and pop service stations, the same size lot but the back end is all empty and well lighted, gas pumps on this street and gas pumps on this street, like 1920. So we have gone backward and don't have any supermarket as such.

I believe that the operation of the oil companies is extremely damaging to free enterprise. This is quite a large group of people in free enterprise, a couple of hundred thousand. That is no small amount of people. I am not speaking for them alone, but in speaking for them, I know that I am speaking for the consumer.

I can't believe that the richest man in the history of mankind, Mr. Getty, in Europe, is interested in free enterprise in this country or would care if price fixing helped his profits, or any illegal control that any oil company, including his, could put on to make a few billion dollars more.

I don't believe that Mr. D. K. Dolwig, who recently bought 15 percent of Union Oil, who is an international investor in Central America, South America, Japan, cares one bit about the free enterprise system in any one of the countries he happens to do business in right

now. These are the people who make the oil business, the huge investors making billions and billions floating in and out of stock in oil companies.

So you can't believe the officials of the oil companies. I believe that they are only mouthpieces and stooges.

Many service station operators feel that with the price fixing, the coercion, the breaking of 2 million operators, it should result in the same thing happening to those officials that happened to the people in the electrical industry, that they went to prison. I don't. I don't think that revenge will serve any purpose, because they have another man who can be promoted to do the same job in the same way. They don't have contracts, they don't have exclusives, they do it all by the position that they are in. They are doing business with a man, who, in his younger years, was able to run a service station, physically strong enough, is also inexperienced, and his inexperience or the inexperience of any citizen is your responsibility, to protect him from any illegal act that is in your department.

Another place that prices are fixed very plainly is in all the motor oil that goes through car dealerships. Certain car dealerships in Los Angeles that sell from 1,000 to 10,000 new cars a month, receive heavy kickbacks in favors that are worth dollars from the oil companies in return for pumping plenty of carloads of their motor oil and transmission oil through their outlets. The car dealer becomes obligated to the oil company and the consumer is denied choice, denied quality, and denied price. The independent oil refiner is denied the opportunity of selling oil through this car dealership because the oil company has loaned the car dealer $40,000 free of interest for 3 years for working capital in return for selling his oil, and somebody has to pay for all working capital; all money is worth interest. We buy equipment for them at no cost at wholesale prices and spend a great deal of money, which has to be charged to the

consumer.

This is only for the car dealers who are favored or who come looking for this assistance. So naturally, the price on oil has to be raised to all car dealers. So many car dealers do not receive their fair share. You should encourage all these car dealers who have not participated in these allowances to sue their suppliers and get their share, even if it is 10,000 lawsuits.

Another strange and peculiar part of oil marketing is the credit card. The credit card is used to control the market. It also happens to make price fixing a little easier. A credit card is a necessary item to many people, but why should the housewife pay the bill for the credit costs for the traveler, the man who uses it in business? Why should it be put on the wholesale price? This is very strange.

Of course, the oil companies always say they have strange conditions and special conditions peculiar to their industry. But there is no reason for it. Restraint of trade exists there in that other credit card companies cannot offer their services, because this would mean that you pay twice for credit, because it costs money to extend credit, probably nearly 1 cent for all the billing costs, the interest on the money, the transmittal of funds, added to the general cost.

This, on the face of it, I think, with the ability you have to make a study of it, it should be obvious that it is illegal to charge me for your credit costs. It should be on the retail price that the dealer

then suggests to his customers, "My price is covering all credit costs," and I can then quit him if I don't like it and go down the street and offer a cash price, or go where someone offers me a cash price.

Now the workingman's community in which your service station does 10 percent credit-card business has to pay for the credit cost for the station on the highway that does 90 percent credit-card business, with the costs that go with it. It doesn't happen in any other industry. When you travel and decide to have dinner on your credit card, you don't have to look for a Hormel restaurant, a Swift or Cudahy restaurant. It is ridiculous. This controls the flow of business through a particular location. This makes it interesting for the oil company.

It also controls the dealer. The dealer isn't about to line up a large amount of credit cards and carry the credit for himself so that he can bill the following, so that the first time the oil company gives him a hard way to go, he can move down the street 3 blocks and take all his business with him a mile, or on the other side of the manufacturing center. I have done this and destroyed the gallonage of the station in doing it, taken it with me. Now you can't do this. They can hold it.

It restrains other types of businesses. Armstrong Tire, Exide, Willard-people who used to be represented in the retail field in the service station business now are not represented. Now you have no freedom of choice in purchasing in Los Angeles and in most metropolitan areas because of the credit card, because you just can't pay twice for credit. It is always packed in there once, and Armstrong is not going to pay for it again, and the dealer doesn't want to.

Anyhow, if the enforcers of the company found him selling a set of tires that wasn't theirs, it would be another nail in his coffin. He is on his way out.

Of course, they are all on their way out. I almost shed a tear when I see a sign, "Free Coca-Cola, Grand Opening." I know the man is on his way out of business that day. It is only a question of when. Of course, they generally hang on longer because they are willing to accept a little less than success.

So there is restraint of trade there, and unfair pricing that should not be there.

Another charge that is put on the consumer is all the bad locations and all the poor locations of the oil jobber and the oil company. The oil jobbers are equally guilty here. They do exactly what their company tells them to. They are just an extension of the oil company. The oil company says, "You must keep a station in that end of town." He keeps a station in that end of town, even though it is 15 cents a gallon rental cost.

In Los Angeles, on the Harbor Freeway at Florence, there is a closed Texaco station. This is a large, shiny, beautiful Texaco station-1920 style, but it is a big lot. And two more closed Texaco stations-there are actually four or five within a mile along that freeway. Texaco got excited and set up Texaco, Inc., and opened one on salary a few months ago.

I stopped and visited with the manager and he computed very easily and conservatively that it cost him 14 cents a gallon to operate the station, plus 11 cents tax, and probably more. So they finally couldn't