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such information. I will appreciate it if you will include this letter and the exhibit as a part of my statement in your printed record.

In submitting this information, I want to reiterate that we are not asking any preferential treatment for asphalt. We realize that this is a matter which will be decided by the State highway departments. We are confident that asphalt will hold its own, not only in original cost but in maintenance cost as well, in any engineering test. We are also aware of the fact that other committees of Congress are concerned with the operation of the highway program. The important thing, however, is that the Federal Government is paying most of the cost of the highway program. Certainly the taxpayers are entitled to insist that the money be spent so that we get the most roads for our moneyand this means that there should be no artificial barriers to competition between all types of surfacing materials.

Very truly yours,

APPENDIX A

REID BRAZELL.

The following are a few selected examples of the savings that can be made when free competition is permitted among various types of surfacing materials. A complete brochure on each of the cases described below, as well as other detailed information on the comparative cost of asphalt versus other types of paving material, is available from the Asphalt Institute, Campus, University of Maryland, College Park, Md.

1. West Virginia

The State of West Virginia has the rare distinction of being the only State in the Nation whose officials have seen fit to eliminate asphalt-pavement competition on its interstate highways by administrative decision.

The result has been that West Virginia is paying $8.33 per square yard, or $234,572.80 per mile, for paving with concrete slabs its portion of Interstate Route 81 across the eastern panhandle of the State. At the Maryland line, West Virginia Interstate Route 81 will connect with Maryland Interstate 81a modern, heavy-duty asphalt pavement let for $4.63 per square yard, or $130,493.44 per mile. At the other end of this costly stretch of slab pavement it will connect with Virginia's Interstate 81-another modern, heavy-duty asphalt pavement being built at an average cost of $4.34 per square yard, or $122,298.88 per paved mile.

West Virginia is paying $104,079 per mile more than Maryland and $112,273 per mile more than Virginia to accommodate the same type and volume of traffic on the same general terrain. This is a prime example of extra cost dictated by decree.

2. Missouri

Despite visible evidence of asphalt durability and records of asphalt pavement economy, Missouri has indicated a reluctance to consider asphalt pavement for its 1,000 miles of interstate roads. Incredibly, Missouri is following this policy in spite of the fact that she already has demonstrated that she can save as much as 50 percent with asphalt construction. Last year Missouri began work on her first modern, heavy-duty asphalt pavement, a 2.7-mile section of the Interstate System near Joplin. Comparable in every respect with turnpike-type construction, this pavement cost Missouri only $2.65 per square yardor $37,312 per mile. In the same area, at the same time, bids were received for a slab pavement to cost $5.27 per square yard-or $74,200 per mile.

Missouri's own contractors, in free competitive bidding, have shown how millions of dollars can be saved on the State's Interstate System.

3. Maryland

While Maryland uses both asphalt and concrete, full advantage is not being taken in designing with asphalt.

4. North Dakota

Here is a State with very little experience in heavy-duty asphalt construction. Consequently, her people fell easy prey to the siren song of the concrete-pavement promoters, clamoring for these blamour pavements which would cost them only 10 cents on the dollar. The State officials succumbed and favored concrete for the State's 600 miles of interstate roads. This action was taken in spite of the fact that the State has many paving contractors ready and able to build modern asphalt pavements-and very few equipped and qualified to build concrete slabs.

An example of the potential savings that could be realized by paving the bulk of the North Dakota Interstate System with asphalt is shown by a case study on U.S. Route 10 through Valley City. Here are 13.1 miles of concrete slabs abutting 12.1 miles of modern-design heavy-duty asphapt pavement, one of the few examples of this high-type asphalt construction in the State. The cost of the concrete section, for a 10-inch-thick slab and 3 inches of subbase, was $87,358.87 per mile of two-lane roadway. The asphalt pavement, 5 inches of asphalt-concrete base and wearing surface on 12 inches of gravel subbase, was $39,010.70 per mile. Here is a demonstrated asphalt saving of $48,348.17 per mile of two-lane roadway. If applied on North Dakota's 600 miles of interstate roads, a substantial part of which will be four-lane divided highway, the potential saving to the taxpayers of North Dakota and the United States might run as high as $30 million.

5. Pennsylvania

There is ample documentation for the fact that Pennsylvania can save many millions of dollars if its design engineers are given a free hand to make greater use of modern asphalt pavement.

For instance, two contracts were let within the same week in 1957 for adjoining sections of pavements on Traffic Route 31, an Interstate project in Westmoreland County. One was a contract for asphalt concrete on 4.38 miles and the other was for 1.88 miles of reinforced concrete slab paving. Bid price on the asphalt section was $2,877,091.41 ($656,870 per mile) and for one-third the mileage on the adjoining slab section the bid price was $1,555,926.51 ($827,620 per mile). This represented a comparative cost per square yard of $3.95 for asphalt and $6.00 for rigid concrete and a real saving, with asphalt pavement, or $170,750 per mile.

The Pennsylvania Highway Department has just come under a new administration. Whereas the former administration was disinclined to consider the economy of asphalt pavement, the new administration is taking another look at the situation.

6. Michigan

This State traditionally has long been regarded as "concrete" State. While using asphalt extensively on its secondary system and peripheral sections of its primary system, Michigan always has specified rigid pavement on its main highways. However, when roadbuilding costs began to climb, the highway commissioner promptly recognized the need to practice construction economy if he hoped to keep an ambitious road program on schedule. He instructed his design engineers to use engineering judgment in selecting pavement type on the Michigan Interstate System and other principal arteries.

First effect of this directive was construction of a 6-mile dual expressway between Grand Haven and Muskegon, paved with asphalt concrete at a cost of $28,000 per mile below engineering estimates for rigid pavement. The commissioner promptly followed with an announcement that an estimated 192 miles of heavy-duty asphalt would be included in the State's 5-year construction scheduled on the interstate and main-line systems.

7. South Carolina

By employing asphalt paving almost exclusively, the Palmetto State is in the happy position of being able to match, without strain, every penny of Federalaid money apportioned to it. Further, it is second only to Texas in the mileage of interstate projects under control while, at the same time, racing forward with a full-blown program of construction and reconstruction on its primary and secondary roads. It offers an excellent example of how a State can put all available funds to work with maximum effects by exploiting the versatile qualities of asphalt paving. This State has traditionally taken advantage of asphalt's economy and is now applying this policy to its interstate mileage. 8. Nevada

Like South Carolina, the State of Nevada has consistently practiced asphaltpavement economy. Recently, under pressure of outside influences, the State took bids for concrete pavement on a section of interstate road. But the bids were too high in relation to what comparable asphalt pavement had been costing, so the State rejected the bids for concrete and readvertised for asphalt pavement.

The CHAIRMAN. Are there further questions?

If not, again thank you Mr. Brazell, for coming to us.

Our next witness is Mr. Otis Ellis.

Mr. Ellis, we recall you from previous appearances before the committee, but for this record, please identify yourself again.

STATEMENT OF OTIS H. ELLIS, GENERAL COUNSEL, NATIONAL OIL JOBBERS COUNCIL

Mr. ELLIS. My name is Otis H. Ellis, I am engaged in the general practice of law, maintaining offices at 1001 Connecticut Avenue, Washington, D.C., and appear here today on behalf of and in my capacity as general counsel for the National Oil Jobbers Council. The National Oil Jobbers Council is in effect a federation of 32 State and regional associations of independent oil jobbers representing jobbers in 39 States.

Following is a list of the membership of the National Oil Jobbers Council:

Alabama Petroleum Association, Inc.

Arkansas Independent Oil Marketers Association.

California Petroleum Marketers Council, Jobbers Division.

Colorado Petroleum Marketers Association.

Connecticut Petroleum Association.

Empire State Petroleum Association, New York.

Florida Petroleum Marketers Association, Inc.

Georgia Oil Jobbers Association.

Illinois Petroleum Marketers Association

Independent Oilmen's Association of New England (Maine, Massachusetts, Rhode Island, New Hampshire, Vermont, and Connecticut).

Indiana Independent Petroleum Association, Inc.

Intermountain Oil Jobbers Association (Utah, Idaho, and Nevada).
Iowa Independent Oil Jobbers Association.

Kentucky Petroleum Marketers Association, Jobber Division.
Louisiana Oil Marketers Association, Jobber Divsion.

Michigan Petroleum Association.

Mississippi Oil Jobbers Association.

Missouri Petroleum Association.

Nebraska Petroleum Marketers, Inc.

North Carolina Oil Jobbers Association

Northwest Petroleum Association (Minnesota and North Dakota). Oklahoma Oil Jobbers Association.

Oregon Independent Gasoline Jobbers & Distributors Association. Pennsylvania Petroleum Association.

Petroleum Marketers Association of New Mexico, Jobber Division. South Carolina Oil Jobbers Association.

South Dakota Independent Oil Men's Association.

Tennessee Oil Men's Association.

Texas Oil Jobbers Association.

Virginia Petroleum Jobbers Association.

Wisconsin Petroleum Association.

Wyoming Oil Jobbers Assocation.

For the benefit of those members of the committee who are unfamiliar with an oil jobber's activities, I would like to briefly describe the role the jobber plays in the distribution of petroleum products throughout the Nation.

Oil jobbers sell and deliver approximately 30 percent of all gasoline sold to service stations. In addition, jobbers distribute well over 50 percent of all petroleum products to the farmers; over 50 percent of the imported commercial fuel oils; and 85 percent of the fuel oil delivered to the homes of the Nation for heating purposes. Jobbers also enjoy a portion of the total commercial consumer account business on gasoline and diesel oil, although these accounts are rapidly being taken over by the major oil companies. Most gasoline jobbers own one or more service stations which they either lease to independent dealers for operation or which the jobber operates himself with salaried personnel.

From this it is apparent that the jobber is vitally concerned about road building programs which affect his distribution outlets and is equally concerned about the means of financing such programs so long as the taxation on motor fuels is involved.

Three years ago when the bill providing for the Federal Highway System, including the financing of the system, was before this and another committee, we appeared in opposition to the program proposed. We pointed out at that time that the proposed program could not be financed for the amount and within the time estimated by the proponents. We further pointed out that the increase of the tax on motor fuels and the shifting of highway routes would impose additional burdens on independent oil jobbers and dealers who were already suffering from "law of the jungle" marketing practices of some of their competitors within the industry.

Both of these predictions have proven to be accurate.

For reasons which are not too clear to us it now appears that the funds are not available to continue the building program contemplated at the time the bill referred to became law, despite the fact that revenues from increased taxes on motor fuels have produced funds which were in keeping with previous expectations. From such information as we can gather it now appears we are confronted with the proposition of whether or not we will continue an accelerated program for the building of an Interstate Highway System as originally contemplated, or whether the program should be curtailed to a pace that is in keeping with revenues available from the existing tax

structure.

If we are to continue the accelerated rate of building, it is apparent that more money must be available from some source.

The President has recommended a 50 percent increase in motor fuel taxes to supply the deficiency. Others have recommended shortterm bonds, and there are still others who suggest that other taxes imposed on the motorist which are now diverted into the general fund should be used for highway purposes. If this latter procedure were adopted, the highway fund problem would be solved, but unfortunately such a diversion would leave a deficiency in the general fund which would have to be made up from other sources or the budget cut to the extent of the deficiency so created.

In the face of these oversimplified alternatives and suggestions, the Congress is confronted with the desires of a nation to have better roads but under conditions where the better roads will be paid for by "someone else."

The position of the oil jobber in his capacity of citizen-motorist is that he is willing to pay his share for new roads and improvements of old roads commensurate with the Nation's needs as related to the Nation's ability to provide these facilities. The jobber feels, however, that he, as a motorist, is already being overcharged for his share of the Nation's roads by virtue of the taxes which he must pay on motor fuels, both State and Federal, and the other special taxes levied on automobiles, tires, accessories, et cerera. The jobber feels that the motorist has already been over-burdened and that if additional funds are necessary to meet our highway needs, these funds should come either from other sources, or from short-term borrowing which can be repaid out of existing tax revenues now imposed on the motorist. About all we can suggest to you on that-and I am not going to repeat what other witnesses have said-is this:

Let us proceed with our building program on a basis dictated by good business judgment within the limit of means currently available. By means currently available, we mean that taxes currently exacted from the motorist be first used to pay for highway programs, and if any money remains, then, and then only, to divert that remainder to the general fund.

They find they do not have the means to carry it out to the point they wanted or the extent that they wanted, and as businessmen, when the time arises, there is only one thing they can do and that is to trim their sails to move in accordance with their ability.

The jobber in his capacity of a distributor of petroleum products has been, and will continue to be, subjected to a loss of business and other financial losses as a result of the Federal highway program and the methods used in imposing and collecting Federal taxes on motor fuels used to finance a portion of this program.

Some of these problems the jobber will have to work out himself. Others will require action by this committee. I specifically refer to existing laws with reference to the Federal tax on gasoline. Currently, the Federal tax on gasoline is imposed at the time of sale by the "producer." The word "producer," as defined by section 4082 of the Internal Revenue Code, includes "blenders" and "importers"; however, the volume of gasoline handled by these last two categories is relatively small.

When this language is translated it means in simple terms that the major oil companies who refine gasoline pay the Federal tax at the time they sell it, while their independent jobber competitors must pay the tax at the time they purchase the gasoline. The result of such provision imposes serious financial hardships on the jobbers as well as impairing the jobber's competitive position in the industry. If in the wisdom of this committee the gasoline tax is further increased, then the jobber's burden will be increased proportionately.

In order to relieve this problem and remove this inequity as between competitors, several bills have been introduced and are now pending before this committee.

These bills are as follows:

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