States economy has been adversely affected by governmental regulations and control.

2.

Enforcement practices of DOE have been unreasonable and injuriously inconsistent because the regulations themselves have been complex, vague and extremely difficult for a small businessman to understand.

3. The blanket preference given to small refiners in the entitlements program results in an anticompetitive advantage for those marketers supplied by subsidized refiners who are able to undercut sale prices of independent marketers supplied by nonsubsidized refiners.

4. Continued Federal controls on some refined products, while others are unregulated, distorts the marketplace by prohibiting the historical seasonal cost allocation among products made by refiners.

5. Implementation of a monitoring/indexing system would seriously weaken the independent wholesale and retail marketer by forcing the marketer to absorb non-product costs actually incurred. The threat of implementation alone weakens the independent marketer's financial viability because banks are restricting credit terms and refraining from making additional loans because of the possibility that marketers may be tied to a per gallon mark-up in an inflationary economy.

6. Reporting and recordkeeping requirements imposed by DOE on the small marketer contribute to the increased costs of operating a fuel oil marketing business.

Fuel Oil Marketing Advisory Committee

Recommendations

To insure that independent wholesalers and retail

marketers of middle distillates remain a viable and competitive force in the petroleum industry and are able to efficiently distribute distillate to consumers as mandated in the Emergency Petroleum Allocation Act, the Federal Government should:

1.

Abandon proposals for any additional monitor ing
and indexing of middle distillate prices at all
levels of distribution for this Winter. Prior to
its Spring hearings on middle distillate prices, DOE
should prepare a study or arrange for a study to be
prepared by an acceptable, independent party which
presents an in-depth analysis of profitability, return
on sales and assets of independent wholesale and
retail marketers of middle distillates and compare
those results with wholesalers and retailers in
other industries. The study should be conducted on
a confidential basis and results should be used by
the Agency as determinative of future need for
monitoring and indexing.

2.

Establish a program of loan guarantees and

financial support for retail marketers who

are experiencing cash flow difficulties

because of aging accounts receivable.

3.

5.

6.

Provide tax credits for marketers who build

additional storage facilities and for home

owners who install storage tanks with a

capacity of 550 gallons or more.

Eliminate the small refiner bias and eliminate

additional entitlement subsidies granted small
refiners.

Develop a closer coordination with the

Environmental Protection Agency on the issue
of Strategic Petroleum Reserves for refined
products. Conduct a study to weigh the
benefits of expanded marketer and consumer
storage in light of the existing and proposed
environmental regulations which are impeding
the expansion of secondary and tertiary
storage facilities.

Prior to submission to the Office of

Management and Budget for clearance, DOE
should publish all forms in their entirety
(including instructions) in the Federal
Register and allow adequate opportunity

for public comment. Upon review of the

comments submitted, the Department should

more diligently make specific findings that the

form is not unduly burdensome to small businessmen

7.

8.

9.

10.

Decontrol motor gasoline and aviation fuels so that
price distortions which inordinately raise the price
of distillate fuels do not occur in the market.
Support the deregulation of natural gas and electric
utility rate reform so that home heating oil is not
placed at a competitive disadvantage with regard to
these alternate fuels.

Implement a more even-handed approach to audits of
independent marketers, particularly on sales made
during the early period of the regulatory program.
Refrain from initiating additional audits of that
period, close pending audits of that period and
resolve issues involving retroactive application
of regulations in favor of the marketer.
Resolution of those cases should be expedited.

Apply rules, rulings and interpretations

of regulations prospectively only. The

11.

12.

13.

Congressional intent to prohibit retro-
active enforcement of the regulations
should be immediately implemented with
regard to all pending and future audits.
Compliance personnel nationwide should
immediately be advised as to this policy.

Permit auditors to compromise amounts of
overcharges determined, as is done by

other enforcement agencies. Such authority
is recommended by the Task Force on Compliance
and Enforcement (July 15, 1977) and would
permit DOE to assess the impact that restitution
to the market would have on the marketers' via-
bility, pursuant to the agency's Congressional
mandate.

Permit the crediting of overcharges against
undercharges in subsequent or previous pricing
periods so that marketers are not compelled to
make restitution twice.

Immediately establish a three year statute of

limitations, similar to that established by the

Internal Revenue Service regulations, on pricing and allocation regulatory violations from their

inception in 1973.