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Gas critics don't know Jack

Editorial

 


In 1964, the average annual salary in the United States was $5,880. It cost 5 cents to mail a letter. You could buy a fine house for $20,000 and a brand new Ford Mustang cost a whopping $2,400.

And when Merv Schmidt came to run a gas station in Coulee Dam, the price of gas in Spokane was 34.9 cents a gallon. Locally, it was 39.9 cents. That nickel difference seemed like a lot to Merv, but people bought the gas, even though it was 14 percent more than in Spokane.

When I got here in 1988, there were six local gas stations. All of them were much higher in gas prices than stations even as close as Wilbur. They still are.

Why? Is it because the local owners now own all three stations left in the area, have a monopoly and can charge whatever they want?

Actually, it’s because every business in a free market economy must charge as much as it can. It’s a law of economics.

In the coulee area, gas prices have always been higher because of one reason alone: we pay the price.

Remember that 14 percent difference in 1964 gas prices? Today the difference between here and Wilbur or Coulee City or Ephrata hovers around 10 percent. A 10-percent difference is not a price gouge.

It’s been years since Merv Schmidt retired, but before he did, some people were convinced there must have been collusion among the several station owners to keep local prices so high.

The conspiracy theory still arises from a fundamental misunderstanding of how a free market works. Today, there’s a Facebook page devoted to comparing local gas prices to those out of town as a means of proving the injustice of it all.

But prices, any prices, are not set on a cost-plus basis. Sure, a bottom line price is set below which the enterprise may as well go out of business, but the actual price depends on what you will pay, nothing else.

The owners of Jack’s stations surely have a standard markup they need and one they get. And figuring that markup, times the number of gallons sold in a year just as surely figured into the financing worked out so they could stick their necks out, buy three local businesses, employ a couple dozen people and perpetuate a business model they simply bought into and try to improve.

Along the way, they help the community where they can, contributing to local sports teams, housing the Senior Center bus in the winter and probably more.

They’re honest business owners who don’t deserve the scorn of those slandering them on Facebook, but do deserve appreciation for having the guts to invest in this community and provide a service, even at a 10 percent boost in some of their prices.

Scott Hunter

editor and publisher

 

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