Doug Kantor:
Thank you for having me.

Jeff Lenard:
You’ve been around many State of the Union addresses and looking at the analysis and going through what it all means. Can you give us a summary of what the purpose of the State of the Union is and what are things that you look for in these messages?

Doug Kantor:
The State of the Union is a constitutional responsibility of the president to report to Congress on what’s happening with the nation. It’s been going on since the Constitution started with George Washington. And you have to think of it a little bit like the Super Bowl for the president because it’s the biggest audience, it’s the time when everybody’s attention is guaranteed to be there, which you don’t know whether it will be the rest of the year. And so the president both talks about his or her priorities, but also it tends to get ‘listy’ as you saw in the State of the Union from president Biden, because you get the priorities from all the different federal agencies, all going to the White House to say, ‘Please talk about this, talk about my priority.’ And so the president, who is ultimately just the executive leader for all these federal agencies, wants to show them all a little bit of attention and love. So it’s laying out the agenda, but it does sometimes tend to run on a little longer than you might think.

Jeff Lenard:
And I assume that everybody who has a stake in being mentioned is at home or in the audience, is excited when their pet project or their pet initiative gets mentioned.

Doug Kantor:
Absolutely for cabinet secretaries. This is a big deal. If the president mentions their key issue that sets them ablaze working with their staff, ‘Hey, this is now officially the president’s big priority.

Chris Blasinsky:
The first 10 minutes or so were about the geopolitical conflict with Ukraine and Russia. Then later on he mentioned tapping the SPR and adding oil to the global markets. Can we talk about that for a second? I believe he said 30 million barrels coming out of the SPR into the U.S. and I don’t remember the number he said for global market. I think it was 60 million. Is that short term or long term?

Doug Kantor:
So that is short term, 30 million out of the U.S. SPR, 30 million for a total of 60 million from other places around the world.

Chris Blasinsky:
Okay.

Doug Kantor:
This is a reaction obviously to that’s happening in Ukraine. What’s happening in Ukraine with Russia’s invasion is really changing the politics around energy policy in some fundamental ways that could matter a lot to our members. There’s been as everyone knows, a huge push toward renewable fuels and electric vehicles and things like that in the United States. The vulnerability of Europe dependence on natural gas from Russia, but also the world’s dependence on petroleum products from Russia, is causing some political pushback where people are saying, look we have to develop traditional U.S. Energy sources, petroleum, and natural gas more to insulate us from those dangers. The SPR is a short term answer from the president on that, but there are a lot of folks saying we need to go farther and talking about approving more pipelines, including Keystone, and getting more leases to drill on federal lands and those types of things. Those are not things this administration is particularly friendly to, but the pressures may build on them the higher gas prices go that they may have to take some action.

Jeff Lenard:
We heard about the pain at the pump from President Biden. We heard about it in the rebuttal from Governor Reynolds, the Republican rebuttal. The SPR or the 60 million barrels, it sounds like a lot. It’s about a half a day of usage on the world market. So by itself it won’t affect things that dramatically, but what it does do is it sends a message possibly to the markets in how do you calm jittery markets that the day of President Biden’s address, oil prices spiked to its highest level in eight years, over a $100 a barrel. The question is where will they go from here? So are these things somewhat trying to, whether it’s the SPR or other things that the president may look at, really trying to calm jittery markets or does it have a material impact?

Doug Kantor:
Well, I think you have to look at the markets the president is focused on most intently, which are the political markets. Number one, he was speaking to the American people and wanting to convey to them that he understands the problem and that he’s doing something about it. It is a much lesser concern, the real actual economic markets of course he wants lower gas prices. That would help him tremendously politically. But that message, and I think the volumes you cited to, do show it’s really a political one. One thing I would point out for our industry, which is extremely helpful, I can’t promise it will last, but it is super helpful, is that in the fall when prices were higher and in part of the summer as well, the president talked about potential antitrust problems within the motor fuel industry and particularly at retail, and asked the FTC to investigate. The FTC has been looking at that.

Doug Kantor:
We’ve spoken with them, we’ve spoken with the White House. We’ve laid out all the market factors that go into this. Thankfully, we didn’t hear that last night. The president did talk about antitrust, but in another context entirely. That’s really good for our industry. There’s going to be more focus on energy and gas prices, but we want the focus to be in the right place, which is the basics of supply and demand. Hopefully folks can do something about that. More supply is always a good thing for the industry, but we don’t need them making unfounded claims about antitrust there. And thankfully he didn’t.

Jeff Lenard:
There were various groups that were cited as, I don’t want say enemies, but we weren’t demonized as an industry, the fuels industry. There were others that were a little bit taken to task. As we transition from a different kind of fuels, talking about EVs, there’s also a dynamic in play there where the administration very much wants to transition to EVs but at the same time we have fossil fuels and the majority of people driving those vehicles. He talked about once again about the 500,000 EV chargers and lower prices of the cost of EV vehicles so people can save on charging. Was there any takeaway that you saw from that, or in not discussing biofuels that’s worth us paying attention?

Doug Kantor:
There wasn’t a lot new there, at least from what I heard. He’s talked about the 500,000 charger goal. That’s one of his highest profile goals during his first term. And he will keep talking about that. He did couch it this time, as you pointed out in the context of you have lower cost to refuel, that is to charge the vehicle, and not have to worry about gas if you’re driving an electric vehicle. That certainly plays into where we are politically today and people’s worries about gas prices. But there wasn’t really a lot of new information there. In fact, one of the potential themes you could look at from the speech was old wine and new bottles. He was still pitching a lot of the things he’s pitched for the last year that have been parts of his Build Back Better plan. But now instead of pitching them the way he had been previously, he’s talking about them as ways to reduce inflation and deal with those types of economic concerns.

Chris Blasinsky:
I think he said something about saving $80 a month in gas if you had an EV. Did I hear that correctly?

Doug Kantor:
That’s the number he cited. I’m not quite sure how they get there.

Chris Blasinsky:
We did a little math, so that’s why I brought it up.

Jeff Lenard:
There’s not a bullseye on our back on that, and that’s always good when you have a period when gas prices are elevated and people are concerned about gas prices. Let’s look at some of the regulations and policies that could affect our business that were also mentioned. We’ll, we’ll start with the raise a minimum wage to $15 an hour. Will that be gaining momentum on a federal level?

Doug Kantor:
It will be gaining momentum in the political discussion. Minimum wage tends to be one of those issues that gets talked about a lot during election years and not nearly as much during non-election years, Democrats have wanted to raise the federal minimum wage for a long time. And it has been a long time since it was raised. So there will be a lot of talk. It is not something that has a legislative path to getting done so we don’t think that’s going to take place this year.

Jeff Lenard:
What about tax rates for corporations and looking at some of those issues. Anything strike you that came out of the message?

Doug Kantor:
Actually, one thing that struck me was that he didn’t spend too much time on that. He certainly mentioned it. It’s part of that package of Build Back Better ideas that have been out there for a while. And he did very strongly make the pledge that people making under $400,000 a year won’t pay a penny more in taxes. It was almost a George H. W. Bush ‘Read my lips’ moment in terms of a tax pledge. But there too he’s dealing with a situation that that legislation has been stalled in Congress because they can’t get a majority in the Senate and it’s not clear what might change that dynamic. It’s hard to see the State of the Union as being something that would change that dynamic, but they’re clearly trying to make the case for it and tax will have to be a big part of it because for it to have any chance you’ve got to pay for not necessarily all of it, but a lot of it.

Chris Blasinsky:
We can get into inflation a little bit. He mentioned rising costs for food, for gas, for housing, pretty much everything. And then mentioned a lot about manufacturing, bringing a lot of it back to America and American made. How well do you think that message played out?

Doug Kantor:
People want things to be made in America. That’s a popular political line. It was striking to me in hearing how much detail he gave as to all the steel, all the guardrails on highways, everything being made in America. I’m not really sure we have the capacity to do that but would be great. We all want to manufacture more things in America, but I’m just sure that’s doable. I suppose we’ll find out because they seem committed to it. They are focused on inflation, that is top of mind in every poll you take of Americans out there. He was pitching things like weatherizing homes and lowering electricity bills as ways to get there. I’m not sure people are going to be convinced that the things that they wanted to do before there was inflation are magically the answers to inflation. We’ll find out.

Jeff Lenard:
Were there any subtle or direct red flags that we didn’t discuss that we may want to think about as an industry that he talked about?

Doug Kantor:
I don’t think there were red flags per se. It was interesting that he talked about privacy very prominently and in particular children’s privacy. I don’t see that as a red flag for our industry, we started the Main Street Privacy Coalition that’s advocated for federal law in this in part because the states are doing it piecemeal. But anytime you get into that debate, there is some friction between where we are and where other main street groups are versus some of the big tech and telecom companies, as well as some of the banks that consistently want exemptions for their own activity and to have all responsibility put on main street. So that’s a danger as we get into that debate, but it’s a good debate to have. I think we have the better of the policy and the politics on that, but it was interesting. It’s not an issue that’s been talked about much. So for the president to raise it very prominently was something new,

Chris Blasinsky:
Speaking of coalitions, the Merchant Payments Coalition, which we founded, I think 2006 or 2005, did we go back that far?

Doug Kantor:
2005.

Chris Blasinsky:
We’re combating swipe fees, credit card fees. Is there an opportunity to reinvigorate our swipe fee debate now that gas prices are nearing $4 a gallon. When gas prices go up cards, credit card companies get a decent amount of change from that. to put it very simplistic.

Doug Kantor:
Yes. Credit card fees are a multiplier of inflation because they’re a percentage of the purchase price. So as prices go up, they go up more because of card fees. And that’s a really problem dynamic that we’ve been talking about a lot. The Merchant’s Payments Coalition just launched an advertising campaign to talk about how high the fees are, both spurred by the inflation dynamic, as well as by the fact that this April there are scheduled increases in the fees coming from Visa and MasterCard. So there’s no question. There will be a lot more discussion of those issues this year. And frankly, the president’s discussion of antitrust was not specific to that area, but the thinking among the antitrust enforcement agencies, like the Department of Justice and the Federal Trade Commission, certainly includes those card companies as well as a lot of the popular focuses on the big technology platforms out there and what they mean on antitrust. So I do think there will be a lot more discussion of those fees and what they do to main street and to consumers.

Jeff Lenard:
You brought up one opportunity, I want to talk briefly talk about that, and then talk about Governor Reynolds’ rebuttal. I took away the discussion about big tech and privacy as being a good opportunity for NACS to continue to talk about our TruAge solution for age verification. And he also talked about immigration reform that is important to NACS. Can you talk a little bit about those two?

Doug Kantor:
TruAge obviously is a big initiative at NACS. It is helping solve some of the problems of today with age verification and the problems of tomorrow as we move toward things like mobile driver’s licenses, ones that are in your phone as opposed to on a plastic card. We’ve got to be ready for those types of changes so that the industry can do what it has to do to comply. With age restricted sales, there’s also some other applications of TruAge and its technology around verifying identity in a more and more digital world. And that’s where there are some I think some real opportunities on the privacy front and there’s been some press around that from those who are thinking ahead about out how do we want the world to look as we do more things digitally.

Doug Kantor:
And frankly, even as we move to things potentially like more digital and cryptocurrencies and those sorts of things. So no question, that’s an opportunity. Immigration, I think is a little bit different. Yes, we’ve been talking about the need for more work-based visas. We’re very narrow in the immigration space. Immigration is an incredibly politically fraught issue. There are large partisan divides between those who really emphasize border security and those who emphasize the need for a different kind of treatment of both immigrants who are here and immigrants who may be coming here. We are trying to stay out of those big debates because they historically don’t tend to go anywhere. But there’s no doubt we have a worker shortage and more immigrants on legal orderly work visas can be one part of helping with that problem. So certainly we’re engaging in those discussions, but we will probably hide from the big picture ‘immigration has to change’ debate.

Jeff Lenard:
What about Governor Reynolds’ rebuttal? Was there anything there from the Republican side that is an opportunity or a concern related to our industry?

Doug Kantor:
Republican or opposition party rebuttals date back decades now, and are an accepted part of the tradition of the State of the Union. Republicans are very focused. They have a few criticisms of this administration that they’re going to hit on time and again going through the election. Inflation crime, border security, and now especially given the events in Ukraine, weakness abroad. Those are the things Reynolds hit on, those are the things they’re going to hammer on day after day. Everybody might get tired of hearing them, but that’s what they’re going to try to do. And I think it’s evidenced both by Governor Reynold’s speech as well as Senator McConnell made clear that Republicans in general don’t plan on releasing a big new agenda talking about what they’re going to do if they get the majorities in Congress. They’re going to run on this being a referendum on the Democrats being in power and whether people like it or not. We’ll see how that goes.

Chris Blasinsky:
Jeff, is it time for trivia?

Jeff Lenard:
It’s time for trivia. Before we close we have…

Speaker 5:
Doug is scared.

Jeff Lenard:
So yeah, we have nice light music. Now let’s talk about the heavy topic of gas prices. We talked about how earlier global situations can often gas prices. So the question for you, Doug, and we’ll give you four choices. When did the U.S. national average for gas prices first hit $1 a gallon? Was it 1967 following the Six-Day War; 1974 following the October 1973 war; was it 1979 during the Iranian Revolution; or was it 1982 after the Lebanon War?

Doug Kantor:
I’m going to say it was 1974.

Jeff Lenard:
Not quite it was…

Chris Blasinsky:
I was wrong too.

Jeff Lenard:

1979. And the reason I know is ‘My Sharona’ was blaring through my car radio. It was a summer. I got my license and gas prices hit a dollar a gallon. A lot of stations didn’t have that extra digit so they were pricing half gallons because their dispensers only went up to 99.9. So age has its benefits on this question.

Doug Kantor:
I can’t believe I missed it.

Chris Blasinsky:
I know, I picked 1982. Doug, thank you for being our guest today. And for everyone who’s listening, you can continue listening to Convenience Matters every week by subscribing to our podcast on your favorite podcast player and by checking us out at conveniencematters.com. We invited George Clooney to be on this episode, but he was busy making a movie somewhere. We’ll keep trying. Thanks everyone.

Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

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