April 8, 2002

CONGRESS BACK FROM RECESS; ENERGY & BUDGET UP NEXT

Congress returns from its Easter recess this Tuesday, with a full plate of legislation awaiting it. The Senate in particular is beginning to get into a “crunch”. It’s time for them to be working on the FY2003 budget, but work isn’t finished on the Energy Bill yet.

President Bush last week reiterated his pressure to pass an energy bill, saying the current international situation is a wake-up call to reduce our reliance on foreign energy sources. But there are at least 50 amendments to the energy bill to be considered, which could take some time. While acknowledging that action is unlikely to be completed this week, Sen. Majority Leader Daschle (D-SD) has indicated his patience isn’t unlimited. We think this means at some point he may try to force cloture (cutting off debate), or even pull the bill from consideration.

A number of the pending amendments are of direct interest to motor fuel marketers, including (among others):

Several amendments proposed by California and New York Senators to delay, delete, or waive the renewable fuel standard, including one to remove the “safe harbor” provision that would provide liability protection for future use of ethanol.

An amendment by Sen. Inhofe (R-OK) to phase out the tax incentive for ethanol as its market share increases.

An amendment by Sen. Baucus (D-MT) to insert into the bill the tax incentives (including small refiner tax incentives for low-sulfur diesel, which SIGMA supports) which were passed by the Finance Committee back in February.

Several amendments by Sen. Grassley (R-IA) to ban MTBE and keep the oxygenate standard in place, including one to require California to ban MTBE as originally scheduled.

Republicans may offer the House energy bill as a substitute for the one currently being debated.

Several non-energy issues may be “tacked on” to the bill, including proposed amendments by Sen. Kyl (R-AZ) to permanently repeal the Estate Tax.

We’ll keep watch and let you know if further help is needed (and likely to be effective).

SUPPLY & PRICE VOLATILITY . . .

Developments in the Middle East, as well as the normal changeover to summertime gasoline, is being blamed for the recent run-up in prices. The Wall Street Journal reported that Phillips Petroleum had run out of gasoline in Phoenix and had cut off unbranded sales in St. Louis. Phillips said others were experiencing similar problems in making the winter-to-summer transition.

SIGMA is in regular contact with EPA and urges members who experience supply problems to get in touch with us immediately so we can help to make sure that regulators don’t do something stupid to “solve” the problems. Contact attorney Greg Scott at Gscott@colliershannon.com, or call him at 202-342-8646.

The overall supply situation will be a topic of discussion at the SIGMA Spring Convention in San Antonio later this month.

. . . AND THE GOVERNMENT

Sen. Levin (D-MI), chairman of the Senate Permanent Subcommittee on Investigations, has announced two hearings (4/30 and 5/2) related to gasoline prices, which have been the subject of a year-long investigation. The focus appears to be on refiners, and addresses price fluctuations and questions of possible collusion. The Federal Trade Commission is also getting into the act, with a second “Public conference: Factors that Affect Prices of Refined Petroleum Products” to be held May 6-9. It will look at many questions from crude oil to retailing, including this one: “Is there any exercise of significant market power currently being observed at either the terminal, wholesale, or retail level in any geographic market?”

Oh, and Hawaii’s Attorney General says there’s “no economic reason” consumers in his state pay the highest gasoline prices in the nation.

ERGONOMICS GUIDELINES

Last Friday, the Bush administration announced that it will be developing a set of voluntary guidelines for industry to deal with problems of repetitive-motion, or ergonomic, injuries. The actual guidelines will be industry-specific and will start coming out by the end of this year. In conjunction with the guidelines, the administration promised stepped-up enforcement of general rules requiring workplace safety. The Clinton Administration had adopted regulations in this area late in its term, but they were later overturned by Congress.

In general, business groups are more supportive of the Bush plan than of the Clinton approach. However, some groups suggest the science doesn’t show any link between repetitive stress and injuries, thus questioning the justification of even voluntary guidelines, and others are concerned about how the proposed enhanced enforcement will actually play out.

ANTI-TERRORISM: TRUCKING

The FBI recently conducted an analysis of truck bombings to determine whether any unique characteristics exist that might help identify, in advance, potential terrorist activity. The FBI's analysis determined that terrorist attempts might be pre-empted by remaining alert for a number of "indicators," which are outlined below. While the presence of an indicator does not in and of itself suggest terrorism as a motive, the FBI's analysis reflects that further examination of the particular circumstances of each case might be in order when one or more of the following indicators is present:

Theft/purchase of chemicals, blasting caps, and/or fuses for explosives;

Theft/purchase of respirators and chemical mixing devices;

Storage space rental for chemicals, hydrogen bottles, etc;

Delivery of chemicals to storage facilities;

Theft or purchase of trucks or vans with a minimum 2,000-pound capacity;

Trucks/vans modified to handle heavier loads;

Chemical fires, toxic odors, or brightly colored stains in apartments, hotel rooms, or self-storage units;

Small test explosions in rural or wooded areas;

Hospital reports of missing hands or fingers or of chemical burns on hands or arms;

Chemical burns or severed hands or fingers that have gone untreated;

Physical surveillance of potential targets (surveillance may include videotaping, particularly focusing on access points);

"Dry Runs" of routes to identify any speed traps, road hazards, or bridges and overpasses with clearance levels too low to accommodate the truck;

Purchase of, or elicit access to, facility blueprints.

Report information about criminal or terrorist activity to your local FBI office or to http://www.fbi.gov/contact/fo/fo.htm.

IMPORT FEES?

The new Chairman of NPRA, William Greehey of Valero Energy, said in his keynote address that the domestic refining industry should seek the same kind of protection from imports as the steel industry has just been granted. The import fees would be designed to recognize disparities due to embedded costs for domestic refiners in complying with environmental regulations. We should emphasize that this has NOT been adopted as an official NPRA position. However, at the request of Chairman Art DeBlois, the matter has been placed on the agenda of the SIGMA Legislative Committee for its meeting on April 26 in San Antonio.

MORE CONVENTION NOTES

We remind you that the issue of below-cost selling and other perceived unfair pricing practices will be discussed at the Legislative Committee meeting in San Antonio. You should have received an extensive packet of material to help you prepare for this “debate”. You’ll note from the packet that not all anti-below-cost-selling laws are equal. So the debate can focus on the issues, we want to avoid having to spend a lot of time “educating” those in attendance on what those differences are (or can be).

The Collaborative Working Group on Technology Tools meets on Friday morning at breakfast in San Antonio. Ken Gunn would like to get feedback from prospective attendees on two subjects: What do you want to hear? Who do you want to hear from? Contact him at 800-811-4866, or e-mail at CALIBER1MT@aol.com. Please note that this session is open to marketers and suppliers (vendors), which is different from the usual format.

SIGMA’s new Travel Center/Truck Stop Task Force will meet for the first time in San Antonio, also over breakfast on Friday morning. If you operate such facilities, or are interested in doing so, please come to this meeting and share your thoughts on what SIGMA should be doing to help you and others like you!

ON THE INTERNET . . .

The latest internet stealth attack on the petroleum industry is an e-mail being circulated which calls for boycotts of companies that import oil from Saudi Arabia. Saying that buying fuel from such companies is “paying for terrorism”, the e-mail lists 5 companies which import Middle Eastern oil, and another 5 companies which do not.