Attorney General Jon Bruning took a break from his child sex fetish to look into everybody's favorite topic these days, gasoline price gouging. His conclusion? "I've looked at the numbers, I've looked at the details, and I don't think anybody's price gouging." I think most rational folks could have told him that and saved him a few hours of his time, but whatever.
The Journal Star article does note that Bruning's office is looking into one (out of 300) complaint of price gouging involving an Omaha gas station that charged around $5.00 per gallon of gasoline. (The LJS doesn't say for how long it is accused of charging that price.) But why? A single station selling gasoline for a ridiculously high price may be involved in price gouging, but it is also engaged in business suicide, and it is not engaged in the more dastardly crime of price fixing. In a city the size of Omaha, does it really matter if one station -- or even a dozen stations -- charges $2.00 more per gallon than every other station in the city? In the Omaha area the ratio of stations charging understandable prices to those charging ridiculous prices was several hundred-to-one. Where's the crime? Where's the collusion? Where's the manipulation of poor, defenseless consumers in a restricted marketplace?
We aren't talking about the lone retailer in Benkelman, Nebraska. We're talking about one moron in Omaha. Let him charge his $5.00 per gallon! If he actually got somebody to pay that amount, I say we give him the Savvy Businessman of the Year Award. Wasting government resources to investigate him for greediness in a competitive marketplace is stupid. If only somebody would investigate Bruning's office.
Then there's the que
stion of why gasoline prices drop so much more slowly than they rise:
City Councilman Dan Marvin has also entered the fray, asking Bruning why pump prices seem to rise commensurately with hikes in gasoline futures contracts, but don’t drop at an equal rate when the futures prices dip.
Bruning's analysis showed that profit margins at most gasoline retailers in Nebraska were around $.04 to $.05 per gallon over the past month. At times, retailers even charged less than they paid for the gasoline. Both those facts answer Dan Marvin's question: retailers get screwed when prices rise quickly, and they recoup their losses (or their lower-than-normal profits) as prices decrease.
If Bruning wants to waste his time, he ought to investigate fireworks retailers, not gasoline retailers. Having worked in the fireworks business I can say with absolute certainty that price fixing goes on each and every year. Then again, fireworks price fixing is abetted by government market controls, so Bruning probably has an interest in not getting involved in that particular fleecing of the consumer.
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Excellent post. Apparently your trackback link is not working, so I’ll just “ping” you in the comments:
In my post at DLMSY:
“Mr. Wilson at The Lincolnite Blog casts some much-needed light on a topic that has generated a lot of heat recently: gasoline “price gouging.” No one enjoys paying higher prices for anything, and when a disruption causes a rapid increase in price the ever-popular search for Someone To Blame can reach a fever pitch. Mr. Wilson’s post is chock-full of good economic analysis and common sense…”
Thanks for the kind words, Abe.
As for the trackback issue, I may have fixed it. Or not. I don’t know. I don’t have much experience with trackbacks or the code required to implement them, so we’ll see.
Looks like manual trackback now works. Blogger/Haloscan don’t allow “autodiscovery” of trackback info, so I don’t know about that. Ryne can test it.
Abe
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