The House Consumer Affairs Committee held a public hearing August 5 on House Bill 2277 (O’Brien-R-Philadelphia) that would create a new Petroleum Energy Office within the Department of Environmental Protection to monitor the availability and price of gasoline, heating oil and other petroleum energy products, assess the competitiveness of petroleum marketing in Pennsylvania and promote the understanding of petroleum energy products.

The legislation also prohibits retailers from selling petroleum products below cost and authorizes the Attorney General to investigate and take action against violators of this provision.

Petroleum Retailers and Auto Repair Association, PA Gasoline Retailers Association and Allied Trades and Mid-Atlantic Truck Stop Operators Association testified in favor of the legislation saying gasoline and fuel refiners and resellers many times sell gasoline to retailers at different prices that result in higher prices for consumers. Independent retailers and truck stops in particular have gone out of business in part because of these “below cost” pricing practices.

The Department of Environmental Protection testified it has already established a Pennsylvania State Energy Office within DEP that performs most of the functions outlined in the legislation.

With respect to tracking the competitiveness of gasoline markets and “below cost” pricing, both DEP and the Office of Attorney General said today’s complex and international markets for petroleum products make it almost impossible to track and prove that someone is selling petroleum products below cost.

The Office of Attorney General, however, supported provisions allowing antitrust actions to be brought against persons in the petroleum industry for pricing issues, but thought those provisions should be separate from any energy office.

The Committee also heard from Sheetz, Inc., Wawa, Inc., and a professor from Penn State who opposed the bill and said there was no evidence that below cost sales harmed consumers.

8/13/2004