Tuesday, May 29, 2007

Gas station owners caught in the middle

The Missoulian had some harsh words to say about Congress's recent legislation dealing with "price-gouging" at the gas pump:

Christened the Federal Price Gouging Prevention Act, the legislation is little more than an attempt to take political advantage of consumers grimacing at high summer-vacation gas prices. It does nothing to bring down those prices, and could actually send them soaring even higher.

The Missoulian's points are all good ones -- the real problems are dependence on foreign oil, failure to conserve enough, blocking exploration efforts, failing to develop alternatives... the usual.

The truly confused folks, though, are going to be gas station owners in a dozen or so states where there are mandatory mark-ups on gas. A case that recently got national attention was in Wisconsin, where an owner was threatened with a lawsuit by the state for charging senior citizens less than the mandatory 9.2% markup on wholesale price.

According to Wisconsin regulators, the discounts represent “unfair competition” against other gas stations, and that — get this — imperils consumers.

So the poor schmuck will get sued by the state if he imperils consumers by charging too little -- and sued by the feds if he imperils a Congressman's re-election by charging too much.


Jay Stevens said...

Yeah, that guy got hosed. Of course, that's anecdotal evidence you're using. If it weren't for the law, there probably wouldn't be any small, independent operators. Now that doesn't mean I'm necessarily in favor of the law...I'd have to look into it more...but I'm not crazy about big biz' practise at selling at a loss to drive small competitors out of the market, then later jacking the prices.

Montana Headlines said...

True, the intent of the law may have been to protect independent owner/operators of gas stations from conglomerate chains who might use the tactics you mention to drive them out of business.

I certainly tend to come down on the side of the small businessman.

The dichotomy of the directives just struck me as amusing -- and indicative of how many unintended consequences arise as a result of the modern addiction to creating nearly unlimited amounts of positive law.

Part of what makes running a small business so difficult are the extensive regulations and complex tax laws from layers of governmental entities from federal to local.

A big corporation just adds a department to handle the regulation, hires a lobbyist to get the regulations written in a way favorable to them, and chalks it all up to the cost of doing business.

A small businessman doesn't have any of those advantages -- and because economies of scale work with dealing with the government just as much as with anything else (perhaps even more so, because of the lobbyist angle,) compliance takes a bigger chunk of time, money, and bottom line.