Wednesday May 2, 2007

Price gouging (again)

gas Once again, our friends over at Metroblogging are outraged by South Beach gas prices, and throwing around accusations of “price gouging.” I corrected them on this when the same thing happened last year, and got an earful from our friend Biscayne Bystander:

It is illegal in the state of Florida to sell gas below your competitors.

The Florida Petroleum Marketers and Convenience Store Association (yes they do exist) does not tolerate price discrimination. Infact, this little known and well organized lobbying group had the Motor Fuel Marketing Practices Act enacted into law in 1985.

With all due respect, “The MFMPA prohibits below-cost selling at retail . . .” does not mean it’s illegal to sell your gas cheaper then the guy down the street. It means it’s illegal to sell your gas for less then what you paid for it. This prevents large retailers from undercutting local competition at a loss to themselves for awhile, until the competition is driven out of business and the big guy gets 100% of the market share.

Let’s say you’re a mom and pop gas station. Actually, nevermind — let’s say you’re a mom and pop doughnut store. I’m a big ghastly doughnut empire, and I move in next door to you. Well, my massive nationwide profits allow me to sell doughnuts for less then it costs me to make them for a few months. All your customers come to me, and after a few months you have to close down. Then I raise my prices back to normal, and I can go about my business without any of your annoying competition. That’s what the law prevents.

Once again: expensive prices ≠ price gouging. Gouging is when prices go up to take advantage of a civil emergency. Expensive is when prices are high because of other factors, like the cost of taxes and insurance on South Beach. I explained all this back in 2005 in the original price gouging article but nobody was reading then.

The gas stations on the beach are for emergencies and for the carelessly rich — everybody else buys their gas on the mainland. (BTW, that photo is from downtown — on the beach it’s much more expensive!)

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  1. Manola Blablablanik    Wed May 2, 02:34 PM #  

    Alesh your technical definition is understood, at least for me … to be honest, I think that gas station survives because a) it has the gas station mafia written all over it (you should see the ugly looks they give me when I walk by with my camera and yet they are always busy) b) it’s off of a main artery, b) people going North of 41st don’t want to schlep a little south to get to the nearest less expensive station, which is just off Dade & 23rd street and as well, the stations off Alton near Dade.

    Yes there are a lot of rich people living around here, but people get rich by not stupidly wasting their money … I am honestly very surprised they get away with hiking up prices so, when they are surrounded by a super saturated religious family community. Plus, with one major bank robbery and one bomb threat in less than two months, 41 street is sure to become the next hotbed district (except on Shabbos, of course sundown on Fridays – Saturday).

    Could it be ignorance? Just less than 2 miles south you can get cheaper (albeit still not cheap) gas.

  2. Guv    Wed May 2, 02:38 PM #  

    I found myself up north on 163rd Street earlier this week, and scored a full tank of premium at $3.17 a gallon. “Valero” was the gas station. I probably spent at least that much to get up there, but since I was there anyway it felt like VICTORY.

    I remember very clearly that in 1996, regular unleaded gas cost 96 cents a gallon….

  3. R.    Wed May 2, 02:51 PM #  

    I figured gas at the beach would be more expensive… I guess I don’t have it as bad as I thought

  4. Rick    Wed May 2, 07:45 PM #  

    Those stations wouldn’t be staying in business if people weren’t paying those prices, unless, like Manola infers, they’re nothing more than a means to wash money. Which, actually, would not be unheard of.

    Whatever the case, you have to be totally brain dead to pay that kind of money for a gallon of gas unless you don’t have enough in the tank to drive the few miles over the causeway. Even then, I’d only put in enough to get me to the mainland to fill up.


  5. Biscayne Bystander    Thu May 3, 08:02 AM #  

    Why you got to bring up old shit?

  6. alesh    Thu May 3, 08:30 AM #  

    Because we have a jackass at Metroblogging who’s making the same accusations. But more importantly, because there are probably millions of people pumping gas muttering “gouging” under their breath, and there’s a semantic distinction here worth pointing out.

    Plus, gas is going to be $4 everywhere by August.

  7. Biscayne Bystander    Thu May 3, 11:17 PM #  

    So you’re upset because they used the term in the wrong context, or that gas prices are continuing to soar despite record windfall profits? Both??

    One thing seems to remain the same, gas prices keep increasing and we’re still lining up at the pump for more. I’m exhausted with this routine and can’t wait for clean, renewable, energy alternatives to hit the market!

    I can’t help but think the oil companies are behind this massive delay to get alternative fuel & cars in the states. Corporate greed disgusts me & makes it very hard to feel bad when their oil fields go and get re-nationalized.

    But it’s not like our elected representatives were caught surprised by record setting gas prices. Here’s a 2004 Congressional report on the World Oil Demand & the Effect on Oil Prices that laid it all out. If you’re interested, it’s worth the read.

    Robin Williams was right when he said “Politician’s are like baby diapers: They’re full of shit and need to be changed frequently for the same reasons.” So it’s refreshing to see eight freshmen Senators propose a 50% tax on these ridiculous profits. And why not?? Wasn’t access to oil one of the main underlying reasons we went war with Iraq? Didn’t crude oil futures hit an all-time high as a result of Hurricane Katrina?

    If they want $4 a gallon, the better start giving more of it back.

  8. alesh    Fri May 4, 07:46 AM #  

    Oh, sure, it’s all the oil companies’ fault. Look, you’re smart, so you obviously know that the vast majority of the money is going to the countries where oil comes from. Oil is expensive because it’s running out, and asshole Americans continue to buy Chevy Suburbans and Nissan Armadas. I swear, every time I see one of those cars that’s obviously new I want to flag the driver down and punch him.

    In his movie, Al Gore has a chart that shows how much higher the fuel economy is of cars everywhere else in the world. It’s not because their technology’s better — it’s because their cars are smaller. And that’s because of regulations that tax gas, so that it’s always been $2-3 more there then it is here. If we’d done the same 15 years ago, billions of dollars that went to IRAN would instead be in the hands of the US government, which could have used it to develop those renewable energy sources you’re talking about.

    Of course politicians couldn’t have done that because they’re elected. Oh sure, they can talk about taxing the gas companies, because it’s popular with people who don’t understand how the business works, and because they know it’ll never happen.

  9. BP Oil Executive    Fri May 4, 12:30 PM #  

    I agree with Alesh.

    Let’s raise the price of gas!

  10. Michael Emilio + Miami Real Estate    Wed May 16, 12:01 PM #  

    If you guys want the cheapest gas locations down here go to: