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Gasoline Sales in Oregon: 16x7by Gary North Recently by Gary North: How Steve Jobs Connected His Lifetime Dots
One
of the most widely held beliefs is that it is good to employ people,
so that they will spend money in the community. They want more people
working on existing jobs. A make-work economy is a prosperous economy.
This belief was widespread in 1850, when Frederic Bastiat wrote
his classic essay on the broken window. A broken window creates
jobs! So, let us break more windows!
The logic of this position is to believe that labor-saving machinery makes societies poor. The logic of it would ultimately ban backhoes and have people with teaspoons do the digging. You would think that voters would not believe such a thing these days. But in two states, Oregon and New Jersey, they do believe it. They believe it with an intensity that keeps laws on the books forbidding car owners to pump their own gasoline. The laws have been on the books for 60 years.
In 48 states, customers are allowed to pump their own gasoline. In 48 states, filing station attendants no longer exist as a profession. Labor costs are lower. These savings are passed on to customers in the form of lower gasoline prices. In Oregon, any convenience store that sells gasoline must hire a gasoline attendant. So, there are fewer convenience stores acting as sellers of gasoline. This law restricts entry into the field. Because there are few customers from 11 p.m. to 7 a.m., it is unprofitable for stations to hire full-time attendants. The solution is to close the stations. When the stations are closed, the manager turns off the pumps. No one can buy gasoline at the station. Early on Monday morning, October 17, I was taking my rental car back to the airport. I planned to buy gasoline at the one filing station I knew was open in Eugene, home of the University of Oregon. It was closed. A sign was on the door: "We will resume 24-hour service on October 17." But 4:30 a.m. did not qualify as October 17. I went looking for any open station. I could not find one on the major highways out of the city. The voters are well aware that they cannot buy gasoline from 11 p.m. to 7 a.m. They have come to accept this as a way of life. They do not understand economics. They do not understand economic cause and effect. The proximate cause: a legislated restriction on pumping your own gasoline. The actual cause: the desire of a cartel in 1951 to restrict entry. The newly invented self-service gasoline industry was only two years old. Lower gasoline prices threatened the profits of the existing operators of filing stations. Notice: we used to call them filling stations – as though a dollar's worth of gas was not good enough, even at 1951's prices. The service station cartel in Oregon stood firm with Chuck Berry six years later.
Six decades later, the law is still on the books. The voters refuse to repeal it. Since then, the gasoline industry figured out that the more gasoline it sells, the more money it makes. It has sought to have the Oregon law repealed. In 1982, the voters rejected this repealing legislation. Back in 1951, the station owners had to come up with reasons to keep the price-cutting self-service stations from entering the market. There had to be a plausible reason – not just protecting station owners' profits. So, it was done in the name of protecting helpless consumers who would otherwise blow themselves up by pumping gasoline. In Oregon and New Jersey, it is still 1951. Well, not quite. A minimum-wage guy with a cap with the bill over his neck is your friendly agent. These guys are gone. Today, all over the United States, people who pump gas do not blow themselves up, but in Oregon they might, or so the Oregon law indicates. The pump technology is not sufficient to protect Oregonians, who are basically children. That, anyway, is what the statute implies. Read it for yourself.
October 19, 2011 Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible. Copyright © 2011 Gary North
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