We Don't Need No Stinking Consistency

For the past 6-months, gas station owners have been under attack by state regulators for their pricing practices just after Katrina, when fears of shut-in Gulf oil production and refining capacity led to a temporary spike in gas prices.  Gas station owners have tried to patiently explain about supply and demand and market dynamics, but to no avail, and are starting to settle:

Sunoco Inc. became the second oil company to
settle a price gouging lawsuit brought by New Jersey authorities,
agreeing to pay $325,000 but admitting no wrongdoing....

As part of a state probe into all oil companies doing business
in New Jersey, more than 100 violations were found at 400 gas
stations in the first week of September, the most common of which
were prices being raised more than once every 24 hours, and
stations showing different prices at the pump compared to their
posted prices, officials said.

Nobody is really getting fined hundreds of thousands of dollars for changing their prices more than once in a day.  Gasoline retailers are getting fined for being unliked, and because politicians find it a populist boon to their reelection to wack on oil companies every once in a while.  One of the reasons that gasoline retailers get fined for petty crap like this is that they are the only retail industry that I know of that actually posts their prices so you can see them on the street when you drive by.  A while back we also highlighted this funny bit of high-handedness in Illinois:

Illinois State Attorney General Lisa Madigan asked 18
operators whose prices jumped significantly after Hurricane Katrina to
donate $1,000 to the American Red Cross or risk a potential consumer
fraud lawsuit, reports the Chicago Tribune.

And you just knew enemy-of-Antarctica and Aspiring Governor Eliot Spitzer couldn't miss out on the populist fun:

Illinois isn't the only state to go after retailers for
price gouging after Hurricane Katrina; New York Attorney General Eliot
Spitzer fined 15 operators $10,000 for pumping up their prices.

Anyway, I guess we still haven't gotten to the "consistency" thing I mentioned in the title.  Having been at the receiving end of such ill-conceived and populist price-gouging and anti-trust lawsuits, what is the gas station trade group doing this week?  Why, appearing in front of Congress to accuse someone else of price-gouging.  In this case, they have dragged credit card companies in front of Congress to demand action on interchange fees:

All consumers pay more at the store and at the pump" as
a result of high interchange rates, added Mierzwinski. He also noted
that "legally suspect" practices have led to market power of the card
associations, and that banks engage in a variety of deceptive practices
to steer customers toward higher transaction fees, such as charging
customers who use PIN debit, as opposed to signature-based debit, which
is much less secure yet carries a higher transaction fee to the

Of course, he is all for free markets, as he says with this pious piece of BS:

I believe in the light of day and I believe in free
markets," noted Armour, in explaining what retailers are--and
aren't--seeking with regard to interchange. He stressed that retailers
are not requesting price caps and price controls, but rather a better
understanding of why U.S. interchange rates are so high.

Right.  Then why are we dragging these people in front of Congress, except that you want to use the coercive power of government to change their business practices?  If you have Ralph Nader's PIRG behind you, then you are looking to weild the government's hammer to achieve something you couldn't achieve through free, voluntary association and negotiation.

As a retailer, credit card companies piss me off too, but I don't run to Uncle Sam for relief.  I just don't accept certain types of cards, like ATM cards with PIN verification, since they cost a fortune in fees.   And in a lot of locations, I don't accept cards at all.  We have put ATM's onsite in a lot of places, reasoning that if consumers want debit card convinience, they can pay the fees by using the ATM machine and then paying us in cash.


  1. Mr. L:

    What's inconsistent here? Sure, petitioning the government to cap these fees is theoretically inconsistent...if the field wasn't already heavily distorted through regulation in the first place. As you pointed out in the earlier entry, merchants aren't allowed to pass the costs of the charge to the customers that use it, and regulations controlling who can process transactions have pushed up the fee -- I seem to recall Wal-Mart was trying to do its own processing a few weeks back, estimating that they could cut their fees in half just by cutting one of the intermediaries.

  2. Lenny:

    If there were a suspicion of price fixing, colusion or other anti-trust activity then it should be stated that way and the "punishment" can fit the crime.

    It strikes me that they're taking the (politically) easy way out by asking congress to trump the industry's price fixing (and previous governmental price fixing) with new improved congressional price fixing. It's the easy way out because politicians are suckers for a chance to claim that they are "lowering costs for consumers"

    And the end result is layer upon layer of regulations that were enacted ostensibly to benefit consumers but end up increasing costs in many unindended ways - which leads to a new effort to mandate new and different cost controls.

  3. Brad Warbiany:

    Mr. L,
    I'm not sure where you live (and when I was in CA I never saw this). But here in Georgia there are quite a few businesses (some gas stations, a few liquor stores) that give discounts for cash purchases. I had never even thought about the fact that they're doing this to reduce fees imposed by credit card companies, but I think I might have to start using cash a little more at the places which offer this...

  4. porchwise:

    I carry an ATM debit card and there are no fees to use it anywhere. I do have a credit card but only because you need one to rent a car, make reservations, etc. Anyone who uses their credit card to charge monthly expenses is a financial idiot. If you can't afford to pay cash, you can't afford it (mortgages and bank financed vehicles aside).

  5. D Schneider:

    Quote: "Anyone who uses their credit card to charge monthly expenses is a financial idiot. If you can't afford to pay cash"

    Actually it can be very adventageous to you credit rating to do just that. The catch of course is to make sure that you pay off the balance each month, which is what a majority of people fail to do.