Gasoline retailer opposes a zone pricing ban in Connecticut

Michael Giberson

An effective zone pricing ban in Connecticut would have the effect of equalizing the wholesale price to gasoline retailers in the state. As such, it would benefit some retailers and harm others.

TheDay.com presents commentary from an owner of a retail gasoline station who expects to be harmed by the zone pricing ban currently under debate in the state:

Like the cost of living, the cost of doing business in Connecticut varies widely depending on your location…Retailers are given the flexibility to price their goods as a reflection of their overhead, as well as recognizing what their competitor down the street may be charging. The same system is used for the sale of gasoline…

If distributors are required to sell gas to dealers like us at the same price regardless of what external marketing conditions might be, we will not be able to compete and will very quickly go out of business.

A bill against zone pricing would benefit a very small, wealthy population and would have a devastating impact on eastern Connecticut’s residents. We have managed to keep our doors open in the midst of a financial crisis… Now, as the summer travel season approaches and the light at the end of the tunnel nears, our livelihood is once again in jeopardy as a result of a short-sighted attempt to cut gas prices for a select group of Fairfield County residents.

As I said of the New York zone pricing ban which went into effect last November, in essence a zone pricing ban is consumer protection for the affluent. This “protection,” if it has any effect at all, will come primarily at a cost of higher prices and poorer service in less affluent neighborhoods.

NOTE: Search for all zone pricing posts at Knowledge Problem.


3 thoughts on “Gasoline retailer opposes a zone pricing ban in Connecticut

  1. Not so, get the facts, as Zone Pricing stop retailers from off setting costs differentials that are different by city or towns and as all business owners understand, those differentials can be huge. Here is our reponse to those that say Yes to Zone Pricing without reading the bill or under standing the industry!

    Response –MORE HARM THAN HELP!

    About the only “truth” in Mr. Guveyan’s recent article on Zone Pricing is the title because the current wholesale pricing system results in more harm for consumers and small business owners and only results in more profits for Big Oil.

    Let’s try to take each of his points and use “FACTS”. CVS stores – each location is not a Franchisee of CVS, but rather CVS owns all of their locations and the differences in price are at retail, not wholesale. The difference represents the additional costs for each store such a land, property taxes and cost of help. They PAY the same wholesale price for those drugs and use the different retail prices to off-set those additional costs. The supplier of the drugs DOES NOT charge them more at each location like Big Oil does. If they did the suppler would make more money and CVS would not be able to off-set those additional costs of operating locations in different parts of the state.

    Level of competition across the state – Mr. Guveyan uses the Berlin Turnpike as an example, in checking if you drive from one end of the post road in Greenwich to the Stamford border, there are more service stations, (competition) than on any same distance of the Berlin Turnpike. The only difference is the wholesale price locations are charged on the Berlin Turnpike when compared to stations on the post road.

    Only legislators Fairfield County are leading the charge. This one is easy, one need only look at the list of Co-Sponsors from past legislation and you clearly see broad bi-partisan support. Only continued misleading information, paid for by Big Oil has created the road block.

    Now for the FTC and those Quinnipiac professors – FTC has never and I mean never done an independent investigation. They have only reviewed the studies paid for by Big Oil and never given the industry a chance to comment regarding those studies. They are all based upon computer models and those models bear a very small resemblance to the real wholesale gas markets. In fact, the only way they can make those models work was to restrict the buyers of gasoline to a very small driving radius and according to Mr. Guveyan, Greenwich & Stamford residents should be driving to Rt. 7 in Norwalk to save money. One problem, that distanced is outside the max amount allowed in the studies. You see it takes time and money to continue to defeat the misleading information and as that time goes by, Big Oil makes more, we have all seen that fact!

    Now for those Quinnipiac professors – they refused then and continue to refuse now to show the data used to create the report they presented to legislators. How can even I say they are wrong if I don’t have the data? Easy, I already have the data, actual wholesale prices charged and presented it to those legislators that have signed on to supporting legislation. Big Oil even testified my data was correct, so if my data was correct, how could they come up with a different opinion when based upon facts? It is a slow battle, but I think we are getting there and this one will be a VICTORY for all Connecticut residents. It is not about one city, one town, one retailer, but about FAIRNESS!

  2. Mr. Fox, will you share your data on wholesale prices charged in Connecticut or is it available on your Gas and Automotive Service Dealers Association website?

    Also, you dismiss the studies by the economists from Quinnipiac University and the studies done by the FTC. Are you aware of any independent investigation or study (not funded by big oil, not funded by gasoline retailers or other interested parties) that explains how a zone pricing ban will improve consumer well-being?

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