After the Elections

With Obama and a divided Congress, what's on the political docket?

Mitch Morrison, Vice President of Retailer Relations

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Here are the facts: Barack Obama captured more than 50% of the votes and crushed Mitt Romney in the electoral college by 332 to 206 seats.

Democrats, predicted to lose seats in the Senate, actually picked up two and headed into the 113th Congress with a 55-45 plurality (because two Independents plan to caucus with the Democrats). Republicans lost some seats in the House but retain a solid majority of 234 to 200.

The Nov. 6 general elections are over, thank goodness. And now we’re entering an era of fiscal cliffs and federal belt tightening. But if you think the country’s deepening debt is all you have to concern yourself with, think again.

From energy to tobacco to health care and swipe-fee reform, legislation should be on your mind. Will the FDA ban menthol cigarettes? Will car-mileage standards and renewable-fuel mandates butt heads? Will c-store operators be able to put into place a health-care strategy that doesn’t devastate them in time to meet the 2014 starting gun? Will the major credit- and debit-card companies and major banks continue to draw billions of dollars in annual fees from the c-store channel?

In this special CSP feature, we look at the top issues confronting you in 2013.

Imports Declining, Domestic Production Climbing

OPEC. Foreign oil. Middle East. Mention these terms and the sense of U.S. dependence on overseas crude oil boils with vigor.

Add the three- and four-hour gas lines in New York and New Jersey this past fall in the aftermath of Hurricane Sandy, and one fears an energy scarcity similar to the oil crises of the 1970s and early ’80s.

Good news: Oil experts forecast a rise in domestic product and greater coopera­tion with Canada. Fueling this optimism is the abundance of “tight oil” and gas liquids from shale production that could drive an additional 4.4 million barrels per day (bbl/d) and lift us above our peak of 11 million bbl/d in the early 1970s.

And there has been an upside to our economic drag. Americans are driving less, or at least not more. While annual forecasts by the federal Energy Informa­tion Administration (EIA) typically call for consumption increases of 2% to 4%, today consumption remains flat to slightly up.

In August, EIA reported that U.S. gas­oline consumption in the first quarter of 2012 averaged 8.5 million bbl/d—down 124,000 bbl/d compared with the same period in 2011, and a whopping 800,000 bbl/d below our country’s peak in 2007.

As a result, net oil imports are declin­ing. And though our population continues to climb, improvements in fuel-efficient vehicles and higher Corporate Average Fuel Economy (CAFÉ) standards are prompting some experts to believe that U.S. demand of foreign oil has peaked.

“I’m really upbeat about 2013,” says Tom Kloza, chief oil analyst for OPIS, Wall, N.J. “Most of the evidence suggests prices being volatile but modest. And the refining industry in North America is incredibly [stronger] than in any of the other continents.”

Does this mean a shift toward greater energy independence? The answer depends greatly on new technologies, global warming and bridging the often stubborn divide between energy produc­tion and environmentalism.

The United States imports nearly 60% of its oil, compared to 28% 30 years ago. Some experts see investment in natural gas as a more expedient solution than vast investments in alternative energy sources such as solar, or electric vehicles. “Liquid will be our future for at least the next 20 years,” says Jeff Lenard, NACS’ vice presi­dent of industry advocacy. “We also happen to be well equipped [infrastructure-wise] to deliver it over the next 20 years.”

Fueling hope in natural gas as a viable resource are several factors. One is the environmentally controversial Keystone XL Pipeline, which President Obama rejected in 2011 over widespread opposi­tion from oil and union interests.

And the other great hope is Canada. Just a few months ago, EIA completed a report outlining Canada as not only one of the world’s five largest energy producers but also the principal source of U.S. energy imports.

“Canada is a net exporter of most energy commodities and is an especially significant producer of conventional and unconventional oil, natural gas and hydroelectricity,” the report said. “It stands out as the largest foreign supplier of energy to the United States.”

On the regulation front, look for some Congressional attention on reconciling two federal measures aimed at reducing emissions and consumption, but which as constructed could come into conflict.

NACS is seeking a resolution that har­monizes the Renewable Fuels Standard and the (CAFE) standards. The Obama administration in August finalized new standards that will increase fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks by 2025, nearly dou­bling the fuel efficiency of new vehicles.Says NACS’ Lenard: “You can’t have the RFS and CAFÉ system together as they are presented. They just can’t happen.”

Tough Medicine

“Obamacare is the law of the land.”

This proclamation came from an unlikely source: House Speaker John Boehner (R-Ohio), just two days after President Obama was re-elected.

Yes, Alabama, Wyoming, Montana and Missouri all passed measures to block the implementation of the Affordable Care Act (ACA). However, according to Lyle Beckwith, such amendments are symbolic at best, given the Supreme Court’s decision to uphold the health-care mandate.

“There will be some litigation, but these statutes will be viewed as pre-empted by the ACA,” says Beckwith, NACS’ senior vice president of government rela­tions. And with the Jan. 1, 2014, deadline less than a year away, retailers need to start sorting through their options.

“It’s extremely important to get ahead and lead this dia­logue,” says Jeff Kirke, vice presi­dent of employee benefits for Holmes Murphy, an insurance brokerage firm based in Des Moines, Iowa, that provides industry-specific analysis of health-care options for c-store retailers. “It’s a pretty daunting and arduous process retailers are going to have to go through.”

First, retailers must determine whether or not they truly have more than 50 full-time equivalents. Retailers who employ more than 50 full-time employ­ees may look to cut down hours.

“I think this will drive many of those sellers to carefully re-evaluate their hourly workforce and to ensure that—to the extent that they can—hourly workers will not work more than 30 hours per week (so that they will be part-time and not subject to the mandate requirements),” Beckwith says.

However, this move is not without risk: Under the mandate, employers evaluate their penalty exposure retro­spectively, looking over the prior year and determining whether employees were full-time from month to month. If an employee was full-time one month, he or she was required to get an offer of cover­age for that month—and retailers will pay a huge price if they aren’t in compliance.

“If even one full-time employee did not have access to qualifying coverage, then the penalty is $167 per month times the overall number of full-time employ­ees the employer employed during that month,” Beckwith says. “This is a very onerous penalty, and one concern has been that there may be isolated instances when a normally part-time employee works more than the 30 hours per week.”


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