UNCLE SAM AT THE GAS PUMP: CAUSES AND CONSEQUENCES OF REGULATING GASOLINE DISTRIBUTION.

The gasoline distribution industry has attracted more than its share of legislation to regulate prices and the means of supply. The Petroleum Marketing Practices Act of 1978 restricts the ability of integrated refinersthose oil refining companies that have both company-operated and franchised retail stations-to terminate franchise agreements and prohibits their subsidizing gasoline marketing operations with funds from other petroleumrelated operations. Five states have enacted laws that entirely prohibit gasoline refiners from directly operating retail gasoline stations. Recently, both the House and Senate have proposed legislation to "enhance" competition in the gasoline distribution industry. Those proposals generally require an integrated refiner to set prices at its company-operated retail stations above its wholesale prices by the full cost of retail distribution and marketing. The bills are supposed to enhance competition by protecting independent gasoline retailers from alleged predatory behavior by integrated refiners. In the absence of such legislation, the proponents argue, integrated refiners will squeeze retail margins to the point that they will drive the independent