Mr. BINSTED. As I recall it, yes. The Justice Department attorneys mentioned it to the court that they had this monitoring system that would protect us and to counter our argument that we must have automatic passthrough.

Now, the truth is they sent to our office in Pittsburgh, Pa., after we told them that we couldn't handle them, 60,000 of these forms for us to distribute to our members at our cost. Now, these forms arrived about September 20, keeping in mind that they were supposed to be back into the Cost of Living Council by September 25. We would have had to truck freight them all over the country to our affiliated associations, have our affiliated associations have their mailing services get them out to their members, and then get them back to the Cost of Living Council by the 25th, and we told them that this was absolutely impossible to accomplish for them. So they then asked us if we would bring to the attention of our members that these forms were available at IRS offices. I suggested that they get this information to the dealers themselves. They said they did not have a mailing list and could they use ours, and I said, no, you can't use ours, and so what we said is we will tell our members that they are available at the various IRS offices. Well, the truth is, they were not. On Thursday, the 20th, and Friday, the 21st, even here in Washington, D.C., I found that forms were not available at IRS offices. They were not available until Friday afternoon in Detroit, probably one of the worst hit areas as far as phase 4 regulations were concerned, because they had been involved in price wars. And it was almost a Keystone Kops atmosphere in Tucson, Ariz., the executive director called me, said he was having a meeting, could we get them some of the forms. I said I'll see what I can do. I called the Cost of Living Council. I think they airfreighted them out of Dallas to Phoenix and had an IRS car drive them to Tucson or something in order to get them there for the meeting. I think it was Friday night. I don't recall.

Now, we had quite a number of dealers that were able to obtain the form, but most of them couldn't complete them and get them sent in or mail them until Saturday, and we found a lot of them then by Wednesday, Tuesday, or Wednesday, or Thursday, getting back by return mail the unopened envelope marked "Post Office Box Closed." So that it was never received by the Cost of Living Council.

Now, I don't know how many forms they had to act on, but they assured us that they could not act until they got this information compiled and that was the reason for the delay and actually if the President had not insisted, I don't believe we would have gotten the relief for at least another week.

As to relief, seeking relief through the use of S-16 forms, we found that in many instances these forms also were not available, there seemed to be some differences in the opinion of IRS officers across the country as to just what is required. Some IRS officers saying just fill out the top half of the form and if you have a wholesale price increase we will immediately give you at least up to a cent relief. Other IRS officers are insisting that the form be filled out completely with all the attendant forms and 3 years of profit and loss statements, and then probably 2 to 3 weeks before action is taken; and we just believe that the dealer cannot survive under these circumstances.

What we have asked the Congress for, and what we will continue to ask the Congress for today under a bill that is being heard today is that we have automatic passthrough of any wholesale price increases on a dollar-for-dollar basis. We are not asking for any additional revenues for ourselves but only the relief of passing through the wholesale prices as they are passed on to us, and we ask that the Cost of Living Council be instructed by the Congress to attack this problem at its source.

Senator MATHIAS. I am interested in your statement that a member of the staff of the Cost of Living Council indicated that by controlling the retailers and not the wholesalers, they could build backpressure on the companies.

Mr. BINSTED. Yes, sir. This was-he explained to me the economic theory of back pressure which would prevent the wholesale price from increasing or at least slow it down, and we told him that in the first place, we should not be used as a device to help them accomplish their job, and second, that if he believed that to be a fact, that he didn't understand petroleum marketing.

Senator MATHIAS. Was this the policy of the Cost of Living Council? Was it enunciated as the view of the member of the staff you were talking with, or was it spelled out as being the Council's considered policy?

Mr. BINSTED. Well, it came to us pretty firmly by Mr. Charles Owens who, I believe, is the Director of Energy group, and I am not sure whether he initiated the theory or whether it came from the Council or from Dr. Dunlop, but we were told pretty firmly that that is exactly what they intended to do.

Senator MATHIAS. To your knowledge, are the gasoline retailers the only small businessmen who have not been given the benefit of the exemption?

Mr. BINSTED. I think that probably extends in our industry now to the jobber, which is essentially the same thing. He is a wholesaler and many times a retailer also, and the diesel fuel types who sell diesel fuel as well as gasoline. But they are essentially the same type of operation and, to my knowledge, they are the only ones.

Senator MATHIAS. Was this one of the elements of your appeal for some judicial relief?

Mr. BINSTED. That was; yes, sir.

Senator MATHIAS. Denial of due process?

Mr. BINSTED. Yes, sir.

Senator MATHIAS. Equal protection?

Mr. BINSTED. Yes, sir.

Senator MATHIAS. I am interested in your analysis of the margin problem that has been allowed. Did your association develop any figures which would establish an average break-even margin?

Mr. BINSTED. We have, and it does vary, and it is very difficult to deal in averages for the United States because you will find in one major metropolitan area substantially more is required than it is in maybe a small Midwestern town or something like that, and that is the danger of dealing

Senator MATHIAS. Labor, taxes, transfer, all the rest, of course, will affect that.

Mr. BINSTED. Yes. So that was the reason we wanted it tied to price as it is now, May 15, to the ceiling price at that time, rather than on arbitrarily determined gross margins by the Cost of Living Council, because gross margin does not necessarily indicate what your net will be, and that is what they had tied it to initially with the January 10 date. It was our August 1 purchase price plus our January 10 gross margin to arrive at a ceiling price.

Senator MATHIAS. So that that overlooked the various elements which go into establishing cost of doing business?

Mr. BINSTED. It did; yes, sir.

Senator MATHIAS. And was there any receptivity to absorbingit would seem to me to be pretty fundamental information in establishing what it costs to deliver a product to the consuming public.

Mr. BINSTED. We have established some charts. We had two associations in particular from different areas to do it. We have done another one from the Maryland area. We had the association from Georgia, which they had an accounting firm that handles 300 service station accounts, I believe, around the Atlanta area in Georgia, and they did it at random and they found that it was nearly a cent increase just from January to June in wage costs to the dealer. And in Michigan the margin and costs were established in a quite lengthy chart for the Cost of Living Council there. We did present that information to them.

In addition to this, we presented to the court and to the Cost of Living Council a chart done by, I think, it is Barber Associates-a group of economists here in Washington who did a study for us on this and indicated what our nonproduct cost increases were during that period of time.

However, the Cost of Living Council insisted on using 1972 as a base to establish what our margin was then and they said that the average margin for the country was 6.74 percent as opposed to about 7.6 percent in July of this year, indicating about an eight-tenths increase in wholesale price or 13 percent increase in margin, but less than 2 percent increase in overall costs.

Now, the problem with that was that 1972 was somewhat of a depressed year with many price wars; and for 1971, I think that Dr. Dunlop's own exhibit to one of the court papers indicates that we had about a 7.3 percent margin back in 1971. So they are asking us to go back to 1971 as far as nonproduct costs are concerned and also absorb wholesale price increases, and we just cannot do it.

Senator MATHIAS. Of course, as I stated in the opening remarks, we are interested in procedures and the access of the public to some relief under the operations of the Cost of Living Council. Is the Council really an effective tool for giving the public relief from inflationary pressures or is it creating problems of its own?

Now, you referred to the survey which the Council undertook of your industry and the difficulties even to the point that they apparently hadn't made adequate provisions for receiving mail.

Mr. BINSTED. I believe that the post office box was probably closed by Tuesday and there was difficulty getting the mail there from Saturday to Tuesday. But I don't see how they could expect to get adequate information if they didn't have the tools necessary available for that except 4 days in advance, 2 of which were weekends, and I

think that was the problem there, that they just were not adequately set up to do it.

Senator MATHIAS. What was the effect on your members of having compiled the information to complete the survey and then getting it back saying the post office box was closed?

Mr. BINSTED. Well, some of them were quite upset by it and I know that in some cases they sent these envelopes to members of Congress. I know that some were sent to Representative Gude. I have a letter here this was on Call Carl, Inc., attempting to get forms here in Washington, and the difficulty they had obtaining them, that it— a telephone call this morning at 10:30 a.m. to the same office.

Now, that was apparently on the 21st. The letter was written and they had still not received the special forms. That was on the 21st. And this is in Washington, D.C., where they should have had the forms available. And Call Carl, Inc. went on to indicate the number of stations they operated and that they just did not get the information to the Cost of Living Council in time since the forms were not available to them.

Now, I think the one thing that is significant, I believe the Cost of Living Council has about indicated that they can't control the wholesale price except to a very limited degree because of the short supply situation that we are faced with, and the fact that they understand that the cost of foreign crude is going up, and they have allowed price increases in domestic crude. If in fact the price must be held down, all we are saying is do it at the source. Don't use us as a tool to do it for them because, first of all, it will not work. And second, it creates an unbearable hardship on those that they are asking to do their job for them.

Senator MATHIAS. Well, thank you very much, Mr. Binsted. I think it might be useful for the committee to have copies of the survey forms as a part of this record, and I will direct the staff to obtain those. I hope we have better luck in getting them than your members did. And they will be admitted in the record at this point.

[The forms referred to follow:]

Cost of Living Council

2000 M Street, N.W. Washington, D.C. 20508

SPECIFIC INSTRUCTIONS FOR COMPLETION OF RETAIL GASOLINE AND DIESEL SURVEY