ALEXANDRIA, Va.—Multiple congressional committees met this week to see what can be done about skyrocketing gasoline prices.
On Tuesday, the Senate Commerce Committee’s hearing, “Ensuring Transparency in Petroleum Markets,” focused on what factors determine the price of gasoline and if more oversight and regulatory authority over oil and gas markets is needed.
In advance of the hearing, NACS, along with NATSO and SIGMA, sent a joint industry letter, explaining how fuel retail markets work and the four main components of gasoline prices, which are the price of crude, refining costs, taxes, and transportation and marketing costs.
“The industry, however, is truly an industry of small business. More than 60% of convenience stores are single-store operators,” the letter states. “Although some might bear the name of a large oil company, this is not indicative of any ownership stake in the business or the real estate, but simply of a marketing relationship or announcement to passing motorists that a certain company’s product is available for purchase at that location (comparable to a soft drink advertisement in a grocery store window).”
In her opening statement, Senator Maria Cantwell, who chairs the Senate Commerce Committee, made it clear that local gas stations do not drive gas prices higher, noting that “many of them are small businesses who are owners who take a lot of heat from the angry drivers. Because the reality is the gas stations are price takers and operate on thin margins, no matter what the retail price of petroleum is,” Sen. Cantwell said.
Key topics of discussion during the hearing included the need for more oversight and regulatory authority over the oil and gas markets, more transparency on the costs and inputs in the market, the need for more domestic energy production, the need for more biofuels and pushes for a windfall profits tax, price gouging legislation and a temporary suspension of the federal gasoline tax.
Additionally, the House Energy and Commerce Subcommittee on Oversight and Investigations hosted CEOs from key oil companies (BP America, Chevron, Devon Energy, ExxonMobil, Pioneer Natural Resources and Shell USA) yesterday at its hearing.
The hearing “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump” devolved into a partisan, finger-pointing, political show of who should be blamed for the surge in prices at the pump. Democrats said that oil companies are manipulating the market with artificial supply scarcity, which is driving up prices, and Democrats on the committee criticized oil company’s profits and acceptance of federal subsidies and tax credits. Republicans focused on Biden Administration policies that limited domestic oil production, refining and pipeline capacity.
NACS, in advance of the hearing, sent the same letter to the House meeting record, sharing the fuel retailers’ perspective on how the retail gasoline market functions.
Meanwhile, Environmental Protection Agency (EPA) Administrator Michael Regan said that the EPA is looking at biofuel options to help consumers with high gas prices and is considering allowing E15 to be sold this summer.
Regan acknowledged that more biofuels, including E15, could help lower gasoline prices. A Trump-era rule allowing year-round sales of E15 was struck down by a federal judge last year. NACS supports the summer sale of E15 and has asked EPA to use its waiver authority to allow for the year-round sale of E15 this summer.
NACS’ most recent blog post “Do Oil Companies Make Money on High Gas Prices?” looks into how much oil companies profit from gasoline sales.
Join NACS at the State of the Industry (SOI) Summit next week, April 12-14, at the Hyatt Regency O’Hare, Chicago, for industry insights on the latest financial, operational, categorical, regional market and consumer trends in convenience. Denton Cinquegrana, chief oil analyst, OPIS, will provide an analysis of what’s ahead for the fuel sector, and John Benson, director, AlixPartners, will share his economic outlook for the convenience and fuel retailing industry for 2022 and beyond. Register for the SOI Summit today.