Monday, January 3, 2011

In Lexington, price sells....gasoline!

Last week, Lexington saw a sudden 20 cent jump in gasoline prices, especially at the "discounters", who are supposed to have the lowest prices. I heard one national explanation for why, but it didn't make sense to me.

And what makes less "cents" is this:

In capitalism, which I support, competition is the regulator. And competition is on three major things: service, quality, price. When was the last time you got service at a service station? And many reports agree, except for minor additives, all gasoline is the same. Most of us gave up brand loyalty years ago; we buy what is the lowest price.

As I was out one morning, I observed the "discounters" at $3 a gallon. But a "major" brand was at $2.85 that morning. By afternoon it had crept up to $3. I watched a tv reporter that evening, in front of a gas station which has just raised its price to $3.

So where was price competition? Why wouldn't various stations, who could have sold gas at less than $3 not do so, to attract business? That's the classical theory of capitalism. Unfortunately, Gordon Gekko has rewritten that theory...Greed is not only good, it appears to be required by all the oil firms, discounters or majors, small or large, mom & pop stores (what very few remain) or chain.

For this, you and I suffer--needlessly. We do need laws to protect us against such greed. The attorney-general should investigate last week's price gouging, and if he doesn't have the powers to do so, should ask the legislature for them.

Congress needs to look into this as well.

Years ago a top oil industry expert said.."If anyone ever figures out how gasoline is priced, someone's going to jail."

That time is long Kentucky and in our nation.

I'm just sayin'...

1 comment:

  1. Mr. Kurtz is confused. In a free market, with many sellers and many buyers, no single participant is able to control prices. However, in our version of capitalism, lots of markets are not free markets. For example, the market for oil is dominated by a few oil companies who supply the dealers and each of these oil companies exerts far more market power than any motorist. When a market is not free, the only way to make it fair is to regulate it.