ATS: Government Forces Gas Station to Raise Prices

So much for capitalism and letting the market demand set the price for goods. A gas station in Maryland was forced to raise it's price of gas after he lowered it to 1.99 compete with nearby stations. Apparently a 2001 law forbids gas stations from selling the gas for less than what they pay for it. Price drops are a common strategy in any business, but apparently are not welcomed in Maryland



How crazy is this story. Dropping the price of your product to generate sales is very common. It's not a secret that Microsoft sells their XBox at a loss of up to $100 per unit. Grocery stores have buy one get one free sales, but gas stations in Maryland can't drop the price of their gas.

Maryland has quite a few other gas laws. Companies that refine gas can't operate stations in Maryland even though they could sell if for a lower price. Government regulation of products has it's place, but should the be worried about the price of gasoline when it's at an all-time high?

there was a story on the news last week about a gas station that had old pumps that couldn't register prices over 1.99. the lines at the station were insane. I saw that piece the same day I went to fill up and saw $3.60/gallon full serve prices here in NYC.

If this stupid war in Iraq is all about the oil, when will we see the dividends?

We don't not gain the oil in iraq but bush and his corprate buddies do. they are using the good name of america and americans to do their dirty work. our government is like corprate lapdogs now.

Crakeur--- If this stupid war in Iraq is all about the oil, when will we see the dividends?

Unless you own stock in the Oil companies, or selected other companies, I seriously doubt you will ever see any benefits.
This looks like a Big Business War. Haliburton sure seems to have benefited.
This was an interesting article. Whoever you are, thanks for submitting it. I was stupid. I thought the market and the economy set the prices. I had no idea that the Government did it. Here in Ohio the gas taxes per gallon are high. I assume they are most places. You would think that would be enough. This is sort of an "Officially Sanctioned Price Fixing", isn't it?

Laws like this are meant to protect the market place from predatory dumping, but you'd think they would have an exemption for commodities with volatile prices such as gasoline.

[edit on 5/6/2005 by djohnsto77]

Well the story is . . . not telling the full story.

The reason that it is illegal to sell gas for less than you paid for it is to keep the big retail giants from undercutting the competition and drive out the little guys (independents). The law was put in place to "fight the last war," i.e. J.P. Morgan and the Standard Oil colossus.

There is also a law that once you have set the price on a shipment of oil for retail, you aren't allowed to raise it, either. You can't jack your's up just because 9-11 or something. A number of Exxon stations in TX got busted for that on the WEDNESDAY after 9-11, when they thought demand would cover them.

The only other times this has been enforce on non-oil commodities were

7-11 selling batteries in the wake of the San Francisco earthquake ( 5 bucks for an AA after the lights went out.

Home Depot charging 100 dollars a sheet of 3 x 5 plywood and 5000 per generator in the wake of Hurricane Andrew.

But it is illegal if you do interstate commerce to reprice an goods you have already advertized for another (high OR lower) price. The only exceptions are for food, I think.

Originally posted by dr_strangecraft
But it is illegal if you do interstate commerce to reprice an goods you have already advertized for another (high OR lower) price. The only exceptions are for food, I think.

Is that why Guitar Center runs radio ads listing all these low prices on crappy guitars and then they say "Gibson Les Pauls! TOO LOW TO ADVERTISE!" so they can't get caught bait-and-switching or jacking the price up on you when you walk in the store, or is there a different reason for that? Forgive me, my college memories are hazy and smoke filled.

Zip

Originally posted by dr_strangecraft
But it is illegal if you do interstate commerce to reprice an goods you have already advertized for another (high OR lower) price. The only exceptions are for food, I think.

I was totally floored when I heard about Home Depot overpricing plywood. I'll never do business with them again.

As for food, I've also heard reports of outrageous prices for bottled water in the aftermath of a flood or hurricane. I can't understand the greed that drives some people; I could never do that myself.

I'm curious, if a station tried to start a price war or compete at $1.999, what is the average gas price in the area? The average gas price in my area has now dropped to around 1.999 or 2.009. I'm happy to see prices dropping at least in my part of the country.

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The only way people and corporations conserve oil is when it gets expensive.

Better the price rises sooner and people quit squandering it, then have us keep guzzling it and hit a brick wall going 90 mph in our SUVs.
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99% of gas stations make only a few cents off of every gallon they sell.The reason prices are so high..or much higher than they need to be is the federal and state tax on gas.What most people don't realize is that for every dollar you put in the tank an average of forty cents of that dollar goes to tax.As for raising or lowering gas prices,gas stations do it all the time.Pay attention in your area and watch what happens when one station lowers or raises their prices.Within a few hours every station in your area will be at a similiar price.If you have ever worked in a gas station you'll know that the station's don't set the price.The oil company or petroleum company that supplies that station's gas sets it.You can be at one price for half your shift an get a call to lower or raise the prices.I don't know the laws in Maryland,but here in Missouri it's not uncommon for a station to lower it's prices way under it's competiters.They have a popular radio station send out some djs and send it over the airwaves that they are sellin cheap gas.

I've worked in the convienence store field for years trust me after the feds an states get thru adding there taxes to every gallon the stations make if they're lucky two cents off every gallon.The selling of gas is only a very very small percentage of sales.

Say that gas down the street from you is $2.00 a gallon..You take out the 36 or 37 cents in federal tax and the 15 or 16 cents in state tax.You're looking at paying only a buck forty,buck fifty a gallon.

But to quit my rambling and get to the point.I don't understand why they would get on this guys case about him lowering the price below his cost.Maybe to make sure they got their money from the tax?I don't think that lower his price makes any difference to the feds or state must be more to the story that we aren't hearing.
The whole thing of big companies tryin to put the little guy out of business is a given.But as I said stations make next to nothing on their gas sales.The main profits come from inside sales like junk food smokes and beer.
So the little guy can still compete with the big corporations.
That Paul Fiore fellow saying that he hasn't seen it being harmful to consumers has obviously not had to put off paying one of his bills in order to make sure he has enough gas money for the week.Or had to tell his kids we can't afford to buy you that book at the book fair this week because of gas prices.Maybe he should go talk to a cab driver and ask him or her if the gas prices have been harmful to them.I'm sure he'll be goin home with a pocketful of teeth.

I was in a rush writing this so if it doesn't make any sense I apologize ahead of time for wasting your time.

I work at Costco and theyve got it at $1.99 per gallon woohoo!!!