HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT February 24, 1998 2:10 p.m. COMMITTEE CALENDAR FUEL PRICES AND THE EFFECT ON THE ECONOMY TAPE(S) 98-1, SIDE(S) A & B CALL TO ORDER Representative Jerry Sanders, Chairman, convened the House Special Committee on Economic Development meeting at 2:10 p.m. PRESENT Committee members present at the call to order were Representative(s) Sanders, Ivan, Berkowitz, Hodgins and Williams. Representative Austerman attended via teleconference from Kodiak. Also attending: Representative Joe Ryan and Representative Pete Kott SUMMARY OF INFORMATION CHAIRMAN SANDERS thanked all the representatives present and gave a summary of why he has called the meeting. He stated that gas prices in Alaska look to be 15 percent to 20 percent higher, with the prices in the Lower 48 running $.99 to $1.01 per gallon and Alaska's prices at $1.15 to $1.27. But when broken down, you have to look at that Alaska does not have to pay freight on the crude, the refineries save roughly $.10 per gallon right there. Alaska also only has a fuel tax of $.08 per gallon while California pays $.28 per gallon. California has been selling their gas for $.99 per gallon, take the $.28 off the top, their selling their gas for $.69 per gallon while at a $1.27 per gallon with the tax off, Alaska is selling for $1.19 per gallon. This has an effect on the economy of Alaska. Why are these things true? There are some obvious reasons, low volume in Alaska, great distances to transport the fuel and severe weather problems. However, government employees and organizations like the Department of Transportation cite the same reasons when they are questioned about costs. They all have the same problems. It is his belief that this has a very significant effect on the economic development of Alaska. There is not a lot of records to go back and check on, but there are some nationwide records. Going back over the country the last 175 years, one can see that for 150 years America has an economic rate of growth that 3.4 percent on an average. In 1973, when the OPEC (Organization of Petroleum Exporting Countries) nations tripled the price of oil, it dropped down, and for 25 years the economic growth rate has been only 2.3 percent. Now that sounds like a difference of 1 percent point but it's not. When you have a 3 percent growth rate and it drops 1 percent, that is a 50 percent drop. That is what has happened with the nation and surely it is the same for Alaska. A slow economic growth rate caused by the price of fuel is the main cause for the political and social unrest that faces Alaskan's today. Its effect can be felt in Alaskan's personal self-esteem and Alaskan's frame of reference as a state. It makes one look for scapegoats. Is it rural people or it is urban people to blame? Possibly governmental employees? Someone is to blame and it is the slow growth that's inhibiting the state's development. Alaskan people appreciate how much they gain when crude prices go up, but what happens when prices fall? Why do retail prices go up three days after an increase, but it takes a year for it to come down when prices fall? The next question is the hardest. What, if anything, can the legislature do about it to get prices down and the growth rate up? Chairman Sanders said he will call on people from the public, but first will let any representatives with questions or comments speak first. REPRESENTATIVE JOE RYAN stated that he had a copy of a report done in 1980, by Mr. Frank DeLong and another fellow whose name he has forgotten. It was written for Senator Fahrenkamp's Resources Committee. Mr. DeLong resides in Fairbanks and was the person who started the North Pole Refinery for Earth Resources. He had it for a couple years and sold it. Mr. DeLong states in the report that there are a couple of the major refiners that sell refined products in Alaska and their prices always seem to be within reach of each other, within a penny or so. The report talked about the refinery in North Pole being one of the most profitable in the history of the oil business. They do get royalty oil under a special agreement with the state and that, supposedly, under the agreement the citizens of Alaska would receive lower petroleum prices. They pay a degradation fee of some $80 million. He has seen an article where there is a 20 percent degradation in the oil that is taken out and then put back in. The refiner should be paying $.12, but are only paying about $.04 due to the 20 percent degradation. Fairbanks had a very large economic development program at the airport to bring foreign air carriers in because it is 250 to 300 miles shorter on the great circle route to the Far East than it is to Anchorage. It was a consortium of people who bought pretty cheap fuel products in Singapore, poured them into Anchorage in the duty free zone and lowered the price $.06 per gallon. That just took care of Fairbanks, they could not compete with those prices. Representative Ryan questioned how fuel could be shipped to Anchorage and sold cheaper than where it was refined. Due to the market, competition? He didn't think that was it. He Also questioned why prices were always constant with Tesoro. Why is there no difference if there is competition? With the trades they do, instead of shipping petro up the Kenai Peninsula to Fairbanks, they trade with Tesoro stations then get a corresponding agreement from the lower areas to save shipping costs. The report listed some of these things that the committee is now questioning. REPRESENTATIVE AUSTERMAN stated that he is in Kodiak and gasoline prices are $1.529 for regular, but one can go down to the plant and buy gas for little cheaper, like $1.05 plus taxes on top of that of $.314. REPRESENTATIVE BILL WILLIAMS didn't feel comfortable getting into a position of dealing with the private sector business, but would like to hear from people in the public sector. REPRESENTATIVE MARK HODGINS agreed that it is difficult in getting involved in the competitive market. He stated that the House Special Committee on Oil and Gas is looking into some of the spillage and tanks that led to the underground tank thing. That costs the industry a lot of dollars and it could or could not have something to do with the high prices. If there was just one business that had high prices, there might be something to look at but with competition, it is difficult to try and come in to mess with the economic situation. Prices have fallen in Juneau since three years ago when Mapco came in. The main axiom is that when you're in business, they owe it to their customers to continue to offer their services. It's kind of thin ice that the committee is treading on, but he still thinks it's a good idea to have meeting to see if they can get them to self-examine themselves. CHAIRMAN SANDERS thanked the other representatives and introduced the first public person to testify. DAVID REAUME, Economic Consultant from Juneau, stated that the information suggested that there is something worth investigating. Is not the fact prices in Alaska are generally higher than elsewhere, or the Kodiak prices are higher than Anchorage prices? Those differences can be explained by such things as weather. He said he thinks it is interesting the way prices respond over time or fail to respond over time. He gave examples of numbers he has taken between January and December of 1997. The price that Mapco paid for crude oil fell 30 1/2 percent and the price Tesoro paid for crude fell a little bit more than 38 percent. The two companies have different contracts. At the same time, prices at the pumps in Anchorage fell less than 2 percent. If one expects to see a one for one translation of crude oil prices changes into pump prices, that would depend on the percent of the total operating costs and other factors that crude oil took up. Mr. Reaume passed out some annual report statements he had gotten off the Internet for Unical, Mapco and Tesoro. He addressed Tesoro's and said to illustrate under the income statement for December 1996, and December 1995, these are the year ending statements. The costs of goods sold, let's set a high percentage of something like 8/9th, whatever translates into somewhere above 80 percent of the revenue is the costs of goods sold. The costs of goods sold has in it other items other than simply crude oil, but he thinks it's safe to conclude from this that crude oil, the acquisition price of crude, constitutes something in excess of half the total costs for these operations. If one was to see a 40 percent reduction in crude oil and if that were translated competitive market to retail pump, one could expect to see something like a 20 percent reduction at the pump instead of the 2 percent. There are some time elements involved. REPRESENTATIVE ETHAN BERKOWITZ said that's assuming there is no other costs in the price of production. MR. REAUME stated that was correct. (Indisc.) no, this was suggestive, it did not prove anything but it was suggestive. It did state the issue. REPRESENTATIVE HODGINS pointed out, from memory, that Tesoro uses about 55 percent of the barrel and gasoline was 25 percent to 30 percent of that so in the barrel itself, they only get 55 percent out that they can actually utilize. The rest was recedes that some of the refineries get to put back into the pipeline. Tesoro had to ship it out to get rid of it and it costs them $20 million. What struck him was that it's not the portion of the barrel that goes for gasoline, it's like maybe 25 percent of the barrel, so even if there is a 25 percent decrease, they are looking at at least an 8 percent to 10 percent decrease that should be for the cost of the crude. It is not a ratio of one to one. MR. REAUME said no and that was what he tried to point out, that the percentage translation at the pump under a competitive market would be, in part, a function of the share of total costs that the product in question took up. If there were no other changes, the costs of crude oil was 50 percent of the total cost producing a slate of products than one would expect something like one half the percentage reduction in retail price then one saw in terms of the acquisition price of crude. So crude prices dropping 38 percent, that implies something in the order of 15 percent to 20 percent reduction. With all things equal in a competitive market and sometime lags involved, but thinks that the issue whether or not there is a problem there. It isn't simply that gas prices are $1.50 in Kodiak and a $1.20 in Los Angeles that directs attention in the wrong direction. We need to look at how pump prices change when crude oil prices change and some other things. For example, compare, if the data is available, the way in which average gas prices charged by Tesoro and Mapco have changed in the same January to December period. Mr. Reaume said he thinks that the nature of the problem is better focused drawn to the way in which retail prices relate to changes in crude oil prices rather than simply enter area costs differentials. The next point he made was regardless of whether one is talking about the retail or the wholesale level, there is both extensive empirical and theoretical research indicating that price fixing is not only possible, but in fact has gone on a relatively regular basis across the United States for a number of years. He gave the committee a copy of a journal article from the Autumn 1996 Rand Journal of Economics by two authors. One is Sevrin Borinstine from the University of California Berkley. He has done a fair amount of work on the question of the relationship between retail petroleum prices and crude oil prices and the issue of how one, if one were a player in the market, would one go about price fixing without getting caught. If one wanted to contact someone who is not only capable of analyzing but in effect up to speed, that would be the sort of person to contact. He gave the telephone number of Mr. Borinstine to the committee. One of the papers passed out to the committee was co-authored by Mr. Borinstine titled, "Do Gasoline Prices Respond as Symmetrically to Crude Oil Prices Change." Mr. Reaume stated that the mere fact that somebody at the University of California has a research paper that asked that question suggests that somebody around here has been looking at some numbers that a least make a reasonable being want to inquire into it. The second article was authored by Karen Brock, he was not an acquaintance of hers, titled. "The Behavior of Retail Gasoline Prices Symmetric or Not?" What that discusses when they are talking about symmetry is the tendency for people (indisc.) to see and these can tell you whether they have actually recorded them. Retail prices going up when crude oil goes up is relatively lock step fashion and then falling to come down. That's the symmetry that they are referring to in these two articles. The third article Mr. Reaume passed out was from the GAO US Journal Accounting Office, its "Energy Security and Policy: Analysis of the Pricing of Crude Oil and Petroleum Products." These three articles are fairly readable and have other references. REPRESENTATIVE BERKOWITZ said it seems to him that according to the Rand Journal, there is an assumption that there is a tacit collusion as opposed to active collusion. When dealing with a retail market for gasoline. It's competitive as there are a lot of players. There is a good knowledge base by everyone. How does one distinguish between tacit collusion and just competition? MR. REAUME answered to distinguish tacit collusion from active collusion and then competition from tacit collusion. "Active collusion" means one gets on the phone and talks to the other guy and they plot, a memo changes hands. That, on occasion, has been found. Tacit collusion usually is embodied in what is called price leader/price follower behavior where for a time they might have tried to cut each others throats. They learned that it makes sense for them as business people to simply let one of them set the tone with respect to raising and lowering prices or changing the way they do business and that qualifies as tacit collusion. When firms are tacitly colluding, they refrain from taking aggressive action on price and other marketing methods against one another. They, in effect, let the lead firm dictate what is going on. That can break down but he has seen it only once in 20 odd years here in Alaska. It happened once in Juneau when Mapco came to town, then it appeared that somebody had reestablished themselves as the price leaders if that model is to be believed. If one is to believe tacit collusion is going on in Juneau, what one might have seen was a period of competition when Mapco first came in followed by a renewed understanding that it isn't the best way for them to conduct business. Competition is simply one does what one thinks is best for their own business. If it means one thinks it's best to match somebody else's price to keep from losing customers, which it usually does, that also means that from that point of view, it is pretty difficult to determine if tacit collusion or competition is going on. If the committee believes that there is a problem, then the anti-trust road is where they have to head. If they believe that a company or group of companies is behaving in an anti-competitive manner, there are only two avenues in which to establish a case. One is statistical and the other is finding the smoking gun. Having someone come forth and testify that is credible or having memos, tapes of telephone conversations, things of that nature. Based on Mr. Reaume's reading of history on anti- trust cases, ones based on statistical evidence are drawn out and frequently come to no conclusion. That is not a cost effective way to use public money unless there is a large amount of money at stake. He cited the example of tobacco companies, the antitrust cases against them were years in the making and until the "smoking gun" came forward in the forms of memos and testimony from Liggett, was going no where. He thinks that if the committee is looking to pursue litigation, it has a long way to go. He gave an idea that he thinks is pretty straight forward but it is not fully developed. They could consider making the price of which companies pay for royalty crude dependent upon their retail performance. He couldn't give a formula, but said it could in effect say if retail prices don't behave symmetrically according to a formula figured out by the state and written into a contract that has been signed, then there is going to be a transfer of funds in effect, the price of royalty crude would go up or vise versa. If the problem is that prices tend to go up with the price of crude but don't tend to go down quite as rapidly this is an avenue the committee might want to seriously investigate. He concluded that the period of investigation has just begun and they might find prices to be reasonable. He doesn't think they are but would keep an open mind and asked if there were any questions from the committee members. REPRESENTATIVE RYAN stated that he had comments regarding Representative Hodgins' remarks. Tesoro does not have the luxury of reinjecting residual fuel. (Indisc.) He checked the prices of bunker fuel in the West Coast, it was about $13. REPRESENTATIVE HODGINS questioned Mr. Reaume about selling royalty oil and tying the price to retail prices. He didn't know how it would be a savings to the consumer and didn't it seem more like a tax. MR. REAUME answered that suppose the company fails to perform, that the price of crude oil goes down and they fail to pass it through to the consumer. The nature of the formula would be to see that the break in crude oil prices is passed on to the consumer. If they fail to pass it on to consumers a portion of money is passed over to the state treasury. It doesn't affect the retail price of crude immediately but it is passed over. REPRESENTATIVE BERKOWITZ asked why the state should get involved. MR. REAUME answered that the justification Representative Berkowitz was looking for in constructing such a formula was an arguable point. It would be a testable hypothesis that if installed he conjectured the result would not be failure to perform, the result would be performance on the part of companies for fear that the other would perform and thereby create a noncompetitive situation for those that were not performing. Failure to respond would lead to the second part of this. Assuming right now that there is a problem and there is structured a formula and both companies fail to perform. The companies would have a certain amount in public interest advertising. They are concerned about the legislative body investigating, it could lead to different tax laws, regulatory changes. The failure to respond at the retail level leads to publicity in the form of the public knowing the company had to write a check back to the state because prices did not go down. That would stimulate price changes. There are really two ways in which a formula of this sort, if constructed properly, would impact the consumer in a positive way. One would be by one company trying to avoid have to pay back money and the other would be the negative publicity that would arise if the company did have to pay back the money. He stated he could not go beyond this in terms of the formula, he has not thought it all the way through but thinks it is worthy of further investigation. AN UNKNOWN SPEAKER asked Mr. Reaume was his background in retail at all. Because what he described was if they punish the companies then they will drop their prices and be more competitive but if they didn't punish them, then there was no competition. REPRESENTATIVE BERKOWITZ said he thought they would be competitive in either stance. MR. REAUME answered that the discussion of the formula was on the assumption there was a finding of minimum tacit collusion, if there is no finding of that then nothing need be done. He did not have a problem using the word punish. REPRESENTATIVE BERKOWITZ was not ready to jump to a conclusion there was anything going on. MR. REAUME said he was not either but was conjecturing. REPRESENTATIVE BERKOWITZ asked if there was any information that Mr. Reaume knew of that compared Alaska's wholesale prices with those of the Lower 48. He saw through looking through the information retail prices but no wholesale prices. MR. REAUME said that it is possible to get it but a subpoena might be needed in some cases. These prices are not typically published and made readily available to the general public. He did not know of any place he could get those numbers right away but knew of where to get them in principal but it would take time. He went on to say that there was a time that the attorney general's office was looking into this matter and the answers they got from the local stations was the stations were only passing on the higher prices due to the high wholesale price. If one were to figure out the differences between the prices of Southeast Alaska and Seattle, being very generous with tanker travel costs, one could never get the wholesale price differential that they had come up with. At that point in time, it appeared that Chevron and Unical were taking advantage of their duopoly (ph.) in Southeast Alaska and exploiting it. The prices in Juneau as it was then and the prices as they would have been under a really competitive market was probably eaten up by the wholesale markup. He did not have those numbers but the AG's office did and probably got them cooperatively, he was not sure if they had to subpoena the companies. CHAIRMAN SANDERS asked Mr. Reaume if he thought that if they could get the television stations to give out the prices of gas, showing where the lowest prices were, if it would have any affect on prices. He thought though getting the stations to do it might prove difficult due to advertising dollars. MR. REAUME answered that the first problem would be getting them to do it and that it could lower prices for awhile, but after a time there would not be a long run effect. He wanted to point out something else also when he was talking about deviation gas prices, average gas prices has dropped he conjectures, more or less with the price of crude. That situation exists in other fields. He gave an example of trash pick up in Juneau ten years ago. Consumers were paying the lion's share of the profit margin of the company instead of the businesses, who dumped the most garbage. Individual consumers are not organized and, therefore, have a harder time getting things changed, where as larger consumers would have less of a problem. That is a general theme, anytime one constitutes the largest part of a business, they have more of a say on prices. REPRESENTATIVE RYAN gave a scenario and asked if it was reasonable. If the legislature looked at the contracts of Mapco and Tesoro and see if there is advantage. Looking at the general oil business, refineries in particular, they are located near a large seaport because they receive ocean shipments of oil. Fairbanks has a unique situation, the refinery is allowed to tap off the TransAlaska pipeline and pay a degradation fee. He doesn't remember if there is a transportation fee involved. MR. REAUME gave his understanding of the degradation charge. That it is based on the volume put back versus the volume taken out, that's one factor and the BTU value of what was put back versus what was taken out. There may be additional factors going into the composition of what was taken out but he didn't know. It is the quantity and quality of what is taken and that is figured right at the Fairbanks terminal. Transportation should not figure in for the crude that goes on down to the Valdez terminal. He would be surprised if it was. He thinks the issue is the total amount they exact and that they do to take out valuable hydrocarbons at Fairbanks that could otherwise be sold to the West Coast, Gulf of Mexico. REPRESENTATIVE RYAN asked if that fee makes up for the transportation from Fairbanks to Valdez. The fees are supposedly for the degradation of the oil. Someone has to pay it. MR. REAUME answered that the ultimate buyer at the end of the line pays for that. REPRESENTATIVE RYAN asked is that a concession. MR. REAUME answered yes. REPRESENTATIVE RYAN said if that's true and they have given certain concessions and under the tacit understanding he was reading about. Mr. Reaume interrupted and said that it really isn't a concession, it is a reflection that when Mapco takes the oil, it doesn't have to go all the way. Oil purchased in the Gulf of Mexico is going to be higher due to transportation costs. It is a cost advantage for Mapco over having not to transport it from Valdez. REPRESENTATIVE RYAN asked what does Tesoro get out of the market when they have to pay transportation costs and they are getting a product that is of less value due to have Mapco putting back in the degraded oil residue. It lowers the value of the royalty oil at the Valdez terminal. They are at a competitive disadvantage to Mapco. How can they stay competitive and still make a profit. MR. REAUME answered that it is cheaper to ship refined products than it is to ship crude so Mapco has to ship their products to Anchorage and that offsets some of the costs. He said it is a good point Representative Ryan was trying to make and he thinks it bears investigating. One has to look at the total cost of acquisition of crude and the quality of crude they are buying, what sort of competitive edge would Tesoro have over Mapco and vise versa in a well defined market. He didn't have any answers and that is one of the things the committee needed to look into to before any firm conclusions can be drawn. CHAIRMAN SANDERS asked that if transportation costs are higher for Mapco to ship down to Anchorage, why is the price $.13 to $.15 lower in Anchorage than it is in Fairbanks. MR. REAUME said that is one of the questions the committee will need to send its research people. It is going to take investigating and will take time. CHAIRMAN SANDERS thanked Mr. Reaume for his testimony and said that the next person to testify would be someone who uses fuel for his business. The focus would be on diesel fuel, which drives the economy. ERROL CHAMPION, Silver Bay Logging, Southeast Alaska, testified that the business' costs for fuel was their second largest expense next to personnel costs. He thinks that statement would hold true for any business which is in natural resource harvesting. They operate all over the state. Their business uses a fleet of helicopter which last year used 954,000 gallons of fuel. The small fleet of turbo planes used 67,000 gallons. They have five tugs and they haul their own fuel to the smaller locations because it cannot be delivered any other way. The five tugs burned 1,550,000 million gallons of fuel in 1997. The traditional logging and construction sights that operate across the state burnt 4,680,000 gallons of fuel. Total fuel 7,257,000 in 1997. Wholesalers who bring it out by barge weekly deliver the fuel in Southeast. Montague Island and Afognak Island are supplied by the company's own tugs which take up to 250,000 gallons loaded up in Anacortes Washington. They make five trips a year. The quick math on that is that they spent 7.2 million dollars on fuel last year and a dime off a gallon is a savings of three quarters of a million. That amount of savings goes to the bottom line, allowing the company to make other investments, improve their operation, etc. The cost of fuel is extremely significant to the business's operation. CHAIRMAN SANDERS said he assumes they buy their fuel in Anacortes because it is cheaper than Alaska. Kenai is closer and if it was cheaper, they would save money. MR. CHAMPION said it is approximately 40 percent cheaper in Anacortes than to purchase it in Kenai. The company buys in bulk consistently and pays about $.80 a gallon. They purchase it from Texaco or BP. There are three refineries and they are very competitive with each other. Even if they filled their tugs at the Seattle waterfront, they will pay less than buying in Alaska. Ballard WA the price is about $.90 per gallon. CHAIRMAN SANDERS asked if the crude was from Alaska. MR. CHAMPION replied that was correct. REPRESENTATIVE RYAN asked what was the cost of transporting the fuel back up to Alaska. MR. CHAMPION said they figured it was about $.06 per gallon. The fuel is from Alaska and they transport it back. They try to have a back run of logs, whatever, so they don't make an empty trip. CHAIRMAN SANDERS asked what taxes were involved. They do have a water born freight and tax tariff. MR. CHAMPION said that was included in the price. It does not include any federal highway tax or sales tax. But it would be the same here. REPRESENTATIVE RYAN asked if they received a rebate on the Federal highway tax for using a marine application. MR. CHAMPION said if they paid it, they would get rebate but they avoided doing that, as it was a long time to get the rebate checks. They try and buy from a wholesale dealer who is not levied. They don't run on federal highways, they are consistently in remote locations. They consume their fuel on off road situations. CHAIRMAN SANDERS asked Representative Austerman if this seemed to comport with information he had in Kodiak about diesel prices. Are prices less outside. REPRESENTATIVE ALAN AUSTERMAN said that was true. Small businesses buy off the West Coast also. MIKE PRINCE, Emmonak, Alaska, representing Lower Yukon School Board, gave testimony on gas prices for the school board. They pay $2.30 per gallon and they have a $.03 sales tax. They might dip in price a little bit in summer but it is usually $2.30. They use the gas for their snow machines. They use stove oil and it is $2.20 per gallon. They bring it in by barge. He said that his household uses about 110 a month on stove oil, maybe more. Their house is pretty well insulated. The figures might be conservative. He has a wood stove and uses 100 to 110 per month. Fuel use for machines is broken down, that in summer they use outboard motors and winter for their snow machines. REPRESENTATIVE RYAN asked what amount of fuel did the school use. MR. CHAMPION said that they put it out to bid. They have 11 sights and seems like bulk rate for heating fuel is about $1.73. They buy a lot of fuel and that price might be a bit conservative. They have on occasion transferred fuel to local entities on an emergency basis. It's an emergency basis only as they are very tight on fuel. The fuel is deliver as late of September, maybe October. They are mandated by insurance companies to have the barges out of the area by a certain time. He did not know where the distributors got their fuel. ART HECKMAN, Pilot Station, runs the retail store in Pilot Station. They retail their gas for $2.60 per gallon. They have a holding tank for approximately 50,000 gallons for heating fuel and gas. That includes the $.04 per dollar sales tax. Heating fuel is $2.30 per gallon. His household uses about 1,000 to 1,500 per year to heat up his home. He uses driftwood to supplement heating costs. The school has a holding tank of, his guesses, 8,000 gallons for heating fuel. That covers the school and the living quarters for the teachers. The light plant has anywhere between 80,000 to 110,000. The electric company tacks on a charge for 55 gallons of fuel to each bill. That is approximately $75 per month to each bill. He said that their distributor got their fuel from the West Coast. It was cheaper. The people run out of heating fuel around spring. They cannot live a subsistence lifestyle, there are only 40 permit holders for subsistence use. When the people run out of fuel, they have to rely on neighbors. Everyone rations their gas. When people want to moose hunt, they are limited to five to six gallons but they need much more to hunt moose. ADJOURNMENT The meeting was adjourned at 3:30 p.m. COMMITTEE ACTION Committee took no action. NOTE: The meeting was recorded and handwritten log notes were taken. A copy of the tape and log notes may be obtained by contacting the House Records Office at 130 Seward Street, Suite 211, Juneau, Alaska 99801-1182, (907) 465-2214, and after adjournment of the second session of the Twentieth Alaska State Legislature, in the Legislative Reference Library.