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D.C. Council considers high cost of gas in the city

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In 2007, the average price of gas in the District was 5 cents higher than the national average, according to AAA figures.

This year, it rose to 28 cents.

"That gap has continued to grow," John Townsend, a manager at AAA Mid-Atlantic, told D.C. Council members on Friday.

The Committee on Government Operations and the Environment explored this trend on Friday in its hearing on a bill that would prohibit "jobbers" — those who sell gas from the refineries to service stations — from both owning and operating retail gas stations. The measure provides a two-year window for compliance.

Although committee members tried to set a general tone, much of the debate has centered on Joe Mamo, a successful Ethiopian immigrant whose company, Capitol Petroleum Group, has amassed more than 40 gas stations in the District. Critics argue he has a stranglehold on the market that requires stations to only buy from him, as the jobber, at high prices that ultimately harm consumers.

The D.C. attorney general has said his office is investigating whether Mr. Mamo's stations have violated antitrust laws.

Mr. Mamo agreed there are high prices in the District but noted that certain retail dealers are to blame for setting high prices at the pump, and it would be fairer to analyze the situation on a station-to-station basis.

"You have the wrong person under legislative scrutiny here," he told the committee. "I struggled, I worked hard and I'm here today ... It's not my fault, it's not my fault."

Witnesses in support of Mr. Mamo said certain dealers in the District are making huge profits and would not necessarily pass on any benefits from the legislation to consumers. They also noted that no other jurisdiction has passed a law to divorce jobbers from retail operations.

Yet witnesses such as Mr. Townsend noted that certain trends are hard to ignore.

"I think that consolidation is hurting consumers," Mr. Townsend said. "Everyone is harmed by what is happening in the District."

Council member Phil Mendelson, at-large Democrat, noted that when prices went down, the rest of the country seemed to enjoy more precipitous drops in prices in the period since 2007. Mr. Mamo testified he acquired 16 Shell stations in 2007 and 28 Exxon stations in 2009 within city borders.

"It doesn't look good for the District," Mr. Mendelson said.

The D.C. Council passed a law similar to the one before them in 2004, but repealed it in 2007. Committee chairman Mary M. Cheh, Ward 3 Democrat, helped repeal the bill, but has turned course and introduced the new legislation.

Council Member Vincent B. Orange, at-large Democrat, is skeptical of the measure. He noted that gas prices in the District have traditionally been higher than surrounding areas, with taxes and refining costs as major contributors to price fluctuations.

"No one has established that Mr. Mamo is the cause of price increases," Mr. Orange said.

Mr. Mendelson said the issue should not be considered a referendum on Mr. Mamo, but the structure of the market, noting his interactions with Mr. Mamo have been "polite," "pleasant" and "proper."

Even Jesse Jackson has entered the fray, issuing a letter to council members arguing the legislation would adversely affect a minority-driven success story. Mr. Mamo, too, said the legislation would harm minority dealers with whom he has lease-contracts, because the law would force him to franchise out the stations.

Several of the contracted operators testified against the bill, noting they cannot afford the single-franchise pricetag.

"This is the most un-American thing I have ever seen," said Dawit Habte Selasie, operator of a Shell station on New Hampshire Avenue in Northeast.

Ms. Cheh had objected to the racial framing of the issue and established at the hearing that Mr. Mamo had asked for Mr. Jackson's letter. But in a heated exchange that followed, Mr. Mamo's lobbyist, John Ray, maintained that Mr. Jackson wrote the letter with his own thoughts and words.

Lynn Cook, manager of Parker's Exxon in the Palisades area of Ward 3, said he can only buy from one jobber, making it difficult for him to compete with the station up the street.

"I was paying more than he was selling it to the public for," Mr. Cook said.

"I don't suppose you could go up their with containers?" Ms. Cheh quipped.

Mr. Mendelson said price was not the only issue. He expressed concern about a favoritism toward the convenience store-gas station models — which tend to sell more gas — than full service, gas-and-repair shop models like Mr. Cook's.

Mr. Cook said the lack of separation between jobbers and retail operations also means he is at greater risk of being replaced as a manager.

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