Posted by Todd Zywicki:
Maryland Protects Its Consumers from Low Gas Prices:
http://volokh.com/archives/archive_2005_05_01-2005_05_07.shtml#1115386128
Yes, believe it or not, Maryland is concerned that gas stations aren't
charging consumers a high enough price for gasoline, so they have
[1]ordered local gas stations to raise their prices:
A gasoline price war erupted in St. Mary's County last week after
one station slashed its price for regular to $1.999 a gallon and
spurred three others to follow suit, giving drivers some hope of
relief at the pump.
But the price dip proved fleeting.
Maryland regulators quickly stepped in and told the stations that
their prices were too low. They needed to go up by 5 cents.
In as much time as it takes to fill the tank of an SUV, prices at
BJ's Wholesale Club, Sheetz and two Wawa outlets bounced to $2.049
a gallon.
This is pursuant to a state law enacted in 2001 that prohibits
so-called "sales below cost" of gasoline. Note, however, that unlike
predatory pricing under the antitrust laws, these laws have been
interpreted [2]to not require recoupment or other elements of
predatory pricingby the purported unfair competitor.
We criticized several of these laws when I was at the FTC (in
[3]Kansas and [4]Wisconsin, for example), through the [5]FTC's
competition advocacy program. Maryland, however, did not request the
FTC's input at the time they enacted their law in 2001. Maryland,
which appears to have never met an ill-considered anticompetitive
regulation that it didn't like, also is one of the states that have
adopted divorcement regulations, which further tend to [6]increase
gasoline prices.
Walter Williams had an excellent [7]column a little while back
criticizing the Maryland law. As he put it:
A couple of weeks ago, heading down to George Mason University, I
pulled into my favorite Wawa gasoline station just off the Bel Air,
Md., exit on I-95 South. At each of the 20 gasoline pumps, there
was a sign posted that Wawa would no longer dispense free coffee to
its gasoline customers. Why? The station was warned that dispensing
free coffee put it in violation of Maryland�s gasoline
minimum-price law.
Here�s my no-brainer question to you: Do you suppose that Maryland
enacted its gasoline minimum-price law because irate customers
complained to the state legislature that gasoline prices were too
low? Even if you had just 1 ounce of brains, you�d correctly answer
no. Then, the next question is just whose interest is served by,
and just who lobbied for, Maryland�s gasoline minimum-price law? If
you answered that it was probably Maryland�s independent
gas-station owners, go to the head of the class.
Williams also has an excellent analysis of the public choice dynamics
of how these laws get enacted, notwithstanding their harm to
consumers.
Thank goodness we have Maryland's intrepid regulators on the case to
protect consumers from paying too little for gasoline. The WaPo
article reports that the state has logged 31 violations in the four
years that the law has been on the books--do the state regulators
really not have anything better to do with their time than to protect
consumers from cheap gas?
References
1.
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/05/AR2005050502032.html
2.
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=10th&navby=case&no=036067
3. http://www.ftc.gov/opa/2004/03/kansasgas.htm
4. http://www.ftc.gov/be/v030015.htm
5. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=610586
6. http://ideas.repec.org/a/kap/regeco/v18y2000i3p217-33.html
7. http://www.townhall.com/columnists/walterwilliams/ww20040331.shtml
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