Hearings, Reports and Prints of the House Select Committee on Small Business

Mr. MARSDEN. I would say that it is misleading.
Commissioner ELMAN. As to what?

Mr. MARSDEN. First of all, they say the gas is all the same, they get it out of the same pipeline. Gasoline is transported, as you know by pipeline. There are differences in different brands. Sometimes there are exchange agreements, but there are differences.

Commissioner ELMAN. What else is wrong with the ad?

Mr. MARSDEN. Frankly, I think it is the poorest type of merchandising. I honestly do.

Commissioner ELMAN. You mean it is poor merchandising to sell gasoline at a low price?

Mr. MARSDEN. That is one statement I would agree with.

Commissioner ELMAN. I'm just trying to find out from you what you think is wrong with this ad.

Mr. MARSDEN. Frankly, I think gasoline, when you're selling it in this manner, just indicates how sick the industry is.

Commissioner MACINTYRE. How much is the tax that is included in this 26-cent product?

Mr. MARSDEN. 10 cents.

Commissioner MACINTYRE. So at the station, that gas is netted at 16 cents?

Mr. MARSDEN. That's right.

Commissioner ELMAN. In other words, this ad is sick not because it is advertising price but because the prices are too low?

Mr. MARSDEN. Both.

Commissioner ELMAN. You don't think it is sick for somebody to advertise that he is selling at a low price, but you say it is sick when he advertises at a price that is too low?

Mr. MARSDEN. This is right. Frankly, I think that the oil industry ought to sell what it has, the best in service and fine motoring conveniences.

Commissioner ELMAN. What about price? Aren't you, as a motorist, as a man who consumes gasoline for his car, aren't you interested in the price you pay?

Mr. MARSDEN. Commissioner Elman, whenever I think I'm getting a real deal, I usually wind up paying more. This has been my experience. I have tried to get some of those real deals.

Commissioner ELMAN. You are suspicious whenever you see a low

price?

Mr. MARSDEN. I am apprehensive, yes, I am. I have reason to be. These reactions are based on personal experience.

Commissioner MACINTYRE. On that score, I would like to make a comment about some milk. I remember a few years ago, I helped conduct a congressional committee hearing in Kansas City, Mo., and 60 miles away, in Mexico, Mo., milk had been selling at 6 cents a half gallon wholesale. The farmer was getting 21 cents a half gallon wholesale for that milk. One housewife thought it was quite a bargain. She went in and bought 37 half gallons to put in her refrigerator and deep freeze. A little later, the price didn't stay at this level, but went much higher than the price the farmer was getting. But in the meantime, all independents had gone out of business in that area.

Is that the point you were trying to make to Commissioner Elman? Mr. MARSDEN. This is right. And Commissioner, I also appreciate the fact that you brought up milk. I can't see why there is a difference between gasoline and milk. Personally, I can't.

Commissioner ELMAN. There is a difference in color.

Mr. MARSDEN. Yes, but why is it that everybody gets all shook up when the price of milk drops and we have the Governor of the State and several of the Economic Development Commission and other officials trying to save one local dairy operation at Devils Lake, N. Dak.? I certainly am for the small businessman or I wouldn't be in the position I am right now. Yet how many hundreds and thousands of gasoline dealers go out of business, lose their shirts, and have a bad name for the industry, and yet what has been done? Relatively little. You folks have certainly helped, and I commend you for it.

Here is an indication. I have some pictures of the price war up in Grand Forks. The price dropped to 22.9 and 23.9. First of all, previously I mentioned a certain regional independent. He moved into the area, and bingo, a price war. He has done it in three locations in our State.

(The pictures referred to were marked "Marsden's exhibit No. 2" for identification, and appear in the appendix, at p. 1028.)

This

Then, after it was settled briefly, another independent dropped the price, because he had heard that somebody was discounting. emotionalism, again, is certainly wreaking havoc in our industry. A major brand dealer took these pictures. It was 5 days before he received any consideration in the way of price supports.

This man is not a mediocre dealer. He was on one of the dealer advisory councils. He employs 12 personnel. He pumps about 500,000 gallons of gasoline. And yet, during the past 6 months, prior to the first of April, he broke even. And the only reason he broke even is that he has U-Haul trailers. He took profits from the U-Haul trailers to subsidize the retail gasoline operation. Do you think he'll stay in business? Not if it continues this way. This is what he told

me.

I just asked, for curiosity's sake, of dealers in the past 3 weeks, "Would you recommend a service station to your son?" Only two gave a qualified "Yes." All the rest said "No," and they said it stronger than that. That is an indictment, I think, on our oil industry. And this was not a prime question. As a former representative of a major oil company, I have no ill feeling toward the major oil company. Some association executives, when they see anybody representing a major oil company, think they have horns. But I don't. I would like to see gasoline marketing straightened out.

Chairman DIXON. Where do you think these independents get their gas from?

Mr. MARSDEN. I think we all know that, based on the testimony we have heard.

Chairman DIXON. A lot of it comes from the majors playing both sides of the street.

Mr. MARSDEN. That's right. In one instance they were cross-hauling, an independent was buying it from a major who, in turn, was getting it from another major's pipeline.

Chairman DIXON. I just heard someone mention something. I have two sons. If they asked me if I wanted them to sit on the Federal Trade Commission, I would tell them "No." That might be the advice I would give them, so I don't know if you impress me too much about that advice.

Mr. MARSDEN. Thank you very much, Mr. Chairman.

If there are any additional questions, I shall be glad to answer them.

I certainly want to express my appreciation, too, or the cooperation your staff and you people have shown me.

Chairman DIXON. We thank you for coming, sir.

Gentlemen, that completes our list of witnesses. During these hearings, we have heard, in my opinion, from all segments of the gasoline industry with one exception. We have not heard from any large independent private brand marketer. I wish we had. But I don't recall any statement having been filed. Perhaps there has been one filed, but no one has asked to be heard.

I think we have an excellent record. We are not going to close that record immediately. We are going, in view of all of the data that has been submitted and the many views that have been presented— the record of the proceeding will be open for the purpose of affording an opportunity to those who wish to file statements in rebuttal or supplemental to the views or clarifications of statements that were made during the course of this hearing.

The record is going to be held open for this purpose until July 16,

1965.

Now, that would appear to be an adequate time. We want everyone to have an adequate opportunity to get the record, study it, study it in view of what they said and what others have said, and if they wish to give us any further information, we'll appreciate it and it will be made a part of the record.

We thank you for coming and for your attitude, and we think that these hearings have certainly been quite helpful to the Commission. We'll stand in adjournment.

(Whereupon, at 5 p.m., May 20, 1965, the hearing in the aboveentitled matter was concluded.)

(This appendix contains miscellaneous extraneous exhibits submitted by attending witnesses in the course of hearings relative to the subject matter noted therein.)