API GASOLINE MARKETING

Gasoline Marketing in the 1980s: Structure, Practices, and Public Policy

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Organization: API
Publication Date: 1 May 1988
Status: inactive
Page Count: 98
scope:

Introduction and Summary

Gasoline marketing in this country has undergone significant changes in the last 15 years. In response to these changes, some dealers and other market participants have called for the enactment of divorcement and open supply legislation at both the state and federal levels. Divorcement would prohibit certain refiners from operating retail service stations. Open supply would prohibit refiners from requiring their dealers to purchase gasoline only from them. Proponents have claimed that such legislation is needed to protect dealers against anticompetitive practices on the part of refiners. This study examines the structure and practices of retail gasoline marketing in the 1980s and evaluates the alleged need for and the potential effects of proposed legislation affecting industry structure and practices.

The study made use of multiple research methods to evaluate the complex issues inherent in the debate over divorcement and open supply legislation. The study team reviewed the extensive body of literature that has addressed gasoline retailing, including past federal and state government studies of the gasoline market. To document major trends that have occurred during the 1980s, the study team interviewed major refiners and assembled detailed refiner data on their retail station networks. To investigate allegations of predatory pricing and the size of dealer margins, the study team conducted an independent survey and analysis of retail gasoline market prices and margins in a random sample of over 1,000 salary-operated and lessee dealer stations of eight refiners.

In summary, the study concludes the gasoline market is competitive and has been responsive to consumer desires and that legislation is not necessary and would harm consumers. Consumers can choose among many major gasoline brand competitors, as well as countless private-brand and unbranded suppliers. Moreover, these competitors offer a wide variety of choices with respect to gasoline service, repair service, automotive parts and accessories, and convenience and snack items. Dealers are an important part of the gasoline distribution system and can compete effectively in the gasoline market. Therefore, neither divorcement nor open supply legislation is required to enhance the viability of dealers. Furthermore, enactment of such legislation would harm consumers by diminishing the availability, quality, brand, and other gasoline product attributes that consumers value, and could result in higher prices.

Document History

API GASOLINE MARKETING
May 1, 1988
Gasoline Marketing in the 1980s: Structure, Practices, and Public Policy
Introduction and Summary Gasoline marketing in this country has undergone significant changes in the last 15 years. In response to these changes, some dealers and other market participants have...
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