ARLINGTON, Va. -- Big business faced off with mom-and-pops editorially recently as The Wall Street Journal, which fired the first shot, and the Petroleum Marketers Association of America (PMAA), which returned fire, printed varying views of state-imposed, below-cost gasoline selling laws.
In the Journal piece titled Another Reason to Love Wal-Mart, senior editorial page writer Kimberley Strassel argued that these anticompetitive lawsare jacking up gas prices around the country. These restrictions take different forms but all have the same purpose: to [image-nocss] protect smaller gas stations from larger competitors who are willing to sell fuel at cut-rate prices. As gas prices go up, this blatant protectionism will be all the more inexcusable.
To say the least, PMAA officials were neither surprised nor impressed by the Journal's opinion. Let's put it this way, they wrote in their PMAA Weekly Review dated July 1. If some WSJ editors were asked to arbitrate a dispute between big business and small business, it is not hard to predict whose perspective would prevail. Of course the mere fact that the WSJ positions itself in any fashion as a consumer champion underscores why the editorial should not be taken seriously.
Within Strassel's piece, which was published June 29, she offered some history on below-cost-sales laws. Some of these laws forbid retailers from selling gas below [their] cost, while others actually force companies to mark up their prices, she wrote. Many were passed back in the 1930s, relics of a bygone era when governments fretted that gas behemoths would use predatory pricing to gain a monopoly and drive out competitors. That threat, we now know, was never very likely, and in the meantime the laws have accomplished the exact oppositeblocking new entrants to the market and preventing pro-competitive price-cutting.
PMAA, however, said that's not the case. Independent researchshows that fair marketing laws are good for consumers. Further, a recent report by the U.S. Government Accountability Office [GAO; see related story in this issue of CSP Daily News] revealed that areas with many competing stations tend to have lower average prices than areas with fewer competing stations.' These two studies show empirically what marketers know intuitively: more competitors equals more price competition.
PMAA concluded, Rather than report these facts, Ms. Strassel repeated the big business 'spin,' hook, line and sinker. Of course, remember, it is the Wall Street Journal, not the Main Street Journal.
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