Patrick Emerson, Oregon blogger of issues economic, wants to pump his own gas. Coaxing readers into defending the practice, he got the usual defenses--it's safer, keeps a corps of workers employed, the money saved by going to self-serve wouldn't be passed on to consumers, etc. Nonsense, says he, in a robust economic defense of self-serve gas.
On the issue of where the extra money from laying off attendants would go (your pocket or the station owner's), he makes this case:
You see, it doesn't take very may gas stations to make a competitive market. The reason for this is that gas is, for the most part, a completely generic product and price information is posted very visibly, so consumers are extremely price sensitive and thus to attract them you have to compete fiercely on price.... The only thing that will change is the marginal cost of providing gas to consumers, and this cost savings will be passed on to consumers by force of competition. [And, by the way, when John Corzine proposed the change for New Jersey, the only other state that forbids self-service, it was the gas station industry group itself that was most instrumental in killing it - which should tell you that they did not expect to make higher profits with the switch.]
Nor does he buy the argument that Oregon's system is good for jobs. He suggest it may be the opposite:
Also, full-service gas, as mentioned in previous posts, has ambiguous effects on overall employment. There will likely be fewer gas stations with full service and high gas prices affect other industries by raising their costs which will also raise supply curves and lower output and employment. It is quite likely that this will actually lower overall state employment, not raise it, which is why we don't mandate employment in general.
And just for good measure, he says the green argument doesn't wash, either.
you may say, but wait, don't we want higher gas prices to discourage people to drive and and thus limit the carbon that is released into the atmosphere? To which I would answer, if that is true then you can increase the tax on gas and achieve the same thing, but the difference is government captures the revenue and can then spend it on things like: lower state college tuition for the types of people that would work as a gas station attendant, investments in public transportation, etc.
If you wish to discuss this sacred Oregon cow with the economist, go read the full post and offer your thoughts.
April 03, 2008 | | elsewhere.Posted in