9th May 2007

Free market working?

posted in American Economy |

Ok, saw this article off of Drudge. It’s a pure example of how good ideas can turn bad.

Gas station owner told to raise prices

MERRILL, Wis. – A service station that offered discounted gas to senior citizens and people supporting youth sports has been ordered by the state to raise its prices.

Now you have to realize, that in most states there is a set amount over wholesale that a gas station owner can charge for retail gas. This was done to stop price gouging by unethical gas station owners, some states have it set at a certain percentage instead of a range to protect larger companies from “loss leading” to drive out the smaller ones.

But the state Department of Agriculture, Trade and Consumer Protection says those deals violate Wisconsin’s Unfair Sales Act, which requires stations to sell gas for about 9.2 percent more than the wholesale price.

To quote a Marine DI that I know, “Good initiative, Bad decision”. Look, to put a cap on gas prices to avoid gouging is good, to put a floor on it to protect small owners (while against pure free market capitalism), also not a bad idea. However to make both numbers the same is wrong. It leaves no competition among pricing and in fact hurts the single gas station owner since he is limited in what he can get wholesale. Also you’ve got a guy here who’s giving breaks for a good reason (and taking money out of his own pocket) by helping to support senior citizens, some of whom are on fixed incomes, and youth sports!
The other problem here is socialism versus free market economics. Bottom line when you tell a person the minimum and maximum he can make off his own blood, sweat and tears, off his own production you’re breaking one of the tenets of free market. Don’t get me wrong, I’m all for price caps in gas, the oil companies have proven time and time again that they can’t be trusted to value human well being over the dollar, not even an inch (a flaw in free market economics), but to say that a business owner can’t give a break to someone is even more wrong. See now if this guy could give breaks what do you think might happen as it gains in popularity? That’s right, everyone including the big soulless corporations would start to do the same thing. This would aid the consumer. So by all means put a cap on the maximum, hell put a floor on the minimum but don’t do something as stupid as making the numbers the same thing! Give the industry a little bit of latitude to make business decisions.

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This entry was posted on Wednesday, May 9th, 2007 at 1:15 pm and is filed under American Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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