Reporting on pedestrian life in the D.C. area

New D.C. Affordable Gas Coalition rises against gas mogul Joe Mamo

November 29, 2011 - 11:34 AM
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The pump is killing us. (Photo: flickr/brownpau)

Last Monday I exited the Georgia Avenue-Petworth Metro station, darkness all around me and light rain falling, only to encounter a man and a woman approaching me with clipboards.

The smiling woman asked me if I like cheap gas. Sure, I said. She asked me if I wanted to sign a petition in support of D.C. Councilmember Mary Cheh's (D-Ward 3) bill on District gasoline — Bill 19-299, the Retail Service Station Amendment Act of 2011, which has floundered in the D.C. Council since Cheh and Councilmembers Jack Evans, Phil Mendelson, and Tommy Wells introduced it on May 17. The bill proposed to amend the 1976 Retail Service Station Act and prevent gasoline distributors, such as Capitol Petroleum Group's Eyob "Joe" Mamo, from owning and operating gas stations, a provision initially enacted in 2004 and nixed in 2007. Mamo controls more than 40% of gas stations in the District and is currently under investigation in D.C. and Arlington. These two people wanted me to support a bill that would end such control.

Welcome to the first big efforts of the D.C./Mid-Atlantic Affordable Gasoline Coalition, a collection of independent gas stations and other partners that has risen up against Mamo and in support of Cheh's bill, this fall. In the last two weeks, AAA Mid-Atlantic officially partnered with the coalition. The coalition's AffordableGasoline.org website, created on October 12, 2011, lists 16 member gas stations and states that members "hold ourselves in direct opposition to all forms of open and masked monopolies/price-fixing," which they as well as others such as AAA allege is happening with the wholesaler and station owner Mamo. Why do District residents pay around 20 cents more for gas than neighboring states Virginia and Maryland? Look to Mamo and the practice Cheh's bill proposes to end, the coalition says. Mamo told the City Paper the bill and this impression wrongly accused him and used his operation as a "scapegoat" for high gas prices back when the bill was introduced. But now forces have gathered to marshal public support against Mamo and resurrect Cheh's bill in a powerful way.

"We are gathering signatures to put before the Council," David Byrd, a lobbyist with Global Political Solutions, told me about the petitioners he's helped organize in the last week and a half.

The effort started on November 21 and is expected to continue through the winter holiday season. Byrd proudly notes that his people received around 100 signatures of support at one Metro station during one two-hour period on the first day. In the coming weeks, the coalition plans to begin sending representatives to ANC meetings to echo their message. The bill's passage stalled in November and discussion is delayed until January, as Councilmembers Vincent Orange and Marion Barry asked fellow members to postpone a vote indefinitely. AAA Mid-Atlantic spokesperson John Townsend II questions the motivations of certain councilmembers who have risen up against the legislation. Alan Suderman examined the racial dimensions of the council struggle in late September as national powers like civil rights activist Rev. Jesse Jackson and the Congressional Black Caucus spoke in favor of Mamo and against the bill.

"It's just a strange political calculus the Council is making," Townsend told me. "It's not about minority entrepreneurship so much as the welfare of 600,000 persons ... There are people who want to put long knives into the bill."

The notion that Mamo has fixed the District's gas prices is nothing new. The attorney general has proposed such violations as has AAA and talk in the D.C. Council in the last half year. Consider this July report from the Committee on Government Operations and the Environment, which details the status of Cheh's bill and the testimony from individuals including Townsend on the practice of allowing gasoline distributors (a middle-man position also known as a "jobber") to also sell the gas to drivers.

Townsend delivered his assessment in emotional but hard, number-based terms when talking to me. He spoke first of the $480 billion that Americans will spend this year, "the highest sum in U.S. history" and $50 billion more than last year. The District always has paid a little more for gas than its neighboring states, Townsend says, in the neighborhood of 4 to 5 cents, but that difference has grown "out of wack" in recent years. Yesterday he laid out recent numbers to illustrate: nationally, gas was $3.30 a gallon; in Virginia, it was $3.21 a gallon; in Maryland, it was $3.26 a gallon; and in D.C.? $3.48 a gallon. It's not a matter of the gas tax, sale tax, or higher rent, he insists, and he calls the Post's suggestion that it is "nonsense" based on getting its "facts wrong."

Other officials also point to the effect that allowing a wholesaler such as Mamo to control around 45 gas stations has on the District's gasoline market. In his June testimony before the Council, D.C. attorney general Irvin Nathan noted that his office "has sought to apply consumer protection and antitrust laws to protect D.C. consumers from anti-competitive practices by sellers of gasoline that result in higher prices to consumers. Bill 19-299 would provide a major assist to our efforts." Townsend doesn't doubt how the gas prices have changed or why. "The District is paying more than the average American," Townsend concluded.

I imagine some will suggest that higher gas prices aren't a bad thing — that the high cost is a better reflection of international realities and more likely to kickstart genuine investment in transit and other ways society can embrace car-free lifestyles. What Mamo is doing, however, seems unacceptable if allegations are true. These alleged violations include price-gouging and an unhealthy financial burden on the District's drivers. But Mamo continues to adamantly defend both jobbers and his status in the District in what has become a battle between two growing and intense lobbying forces.

"There are no real benefits for the consumers [in Cheh's bill]," Mamo insisted in his June testimony before the D.C. Council, "nor am I the new 'Rockefeller.' A jobber is simply a gasoline wholesaler that fosters competition and engages in volume retail gasoline business. When oil companies and Wall Street speculators drive up prices, jobbers suffer too."

A May editorial in the Washington Post echoed Mamo's thoughts. The newspaper argued that the D.C. attorney general was barking at nothing. "We doubt there’s any wrongdoing afoot," the Post declared. "Mr. Mamo’s business model is both common in gas retailing nationally and perfectly legal in the District." The editorial board suggested that the business model posed no harm to consumers.

The Coalition for Affordable Gasoline plans to fire up support among the District's residents. Townsend said the decision to partner with these gas stations, many of whom are in the process of suing Mamo, was easy for AAA. He points to AAA's longstanding concern about these issues and the 80,000 AAA members who live in D.C. Townsend told me he's "optimistic" about the attorney general's antitrust investigation and called this a "very potent issue" that deserves more attention in the coming weeks. In addition to gathering signatures and visiting ANC meetings, the coalition has a web advertisement in the works. David Byrd told me the coalition is seeking new partners. He spoke of taxi companies and the United Black Fund. He speaks of "lost revenue for the District" and how the coalition hopes to gather the largest group of people they can that supports cheap gas and to take that group to the Council and in favor of Cheh's bill. However accurate or fair the charges against Mamo may or may not be, the rallying cry of "cheap gas" strikes me as particularly effective in our strained economy of today.

"We think this is a bottom-line, pocket-book issue," Byrd said.

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