Gas Price Archive
Big oil, false choices and Pat McCarran's oranges
originally published May 5, 1996
The recent nonsense over gas prices has shown once again how corporate America's customers are treated as hapless, helpless cash cows. The skinning and slicing is shamelessly done in public places, such as your local purveyor of petroleum and comestible combustibles.
The roadside repository where you purchase overpriced fuels for both yourself and your gas hog provides a perfect model of the phony choices served up by our capitalistic consumer society. Post or Kellogg's Corn Flakes? Chevron or ARCO unleaded? USA Today or the Reno Gazette-Journal? Distinctions without differences.
The automobile in which you transport your groceries represents an equally fraudulent menu of options. Mercury Sable or Ford Taurus? Infiniti or Lexus or Nexus or What-the-Heck's-This? Honda Tinfoil, Neon Flasher or GEO Jellybean?
If it will make you feel any better, try to compute the price per gallon of Budweiser, Snapple or Coca-Cola and compare the result with fuel for your sporty but family friendly Detroiyota Belchfire.
Consumer options, whether for sugar corn pops or politicians, are most often confined to packaging, not contents. By the time a product gets to the polling place or AM-PM, he, she or it has already been screened, cut, trimmed, customized and homogenized. The great unwashed are allowed only the minor amusement of grousing about the lousy, overpriced selection. At the consumer level, candidates are cars are candy bars. All offer the same grease and sugar, but arrive in different wrappers, always introduced via cute commercials.
That vaguely uncomfortable taste you drive away with while slurping your Slurpee is the feeling you've been had, forced to play the other guy's game. Rigging the playing field represents the difference between mogul and munchkin, between selling consumables or being consumed.
The corporate elite not only field a team, but control all aspects of competition. Players merely provide emotional triggers to exploit the public for profit. Athletes are Trojan horses for robber barons who not only buy the stadium (all too often with money extorted from taxpayers), but also create a monopoly league, make their own rules and purchase politicians to pass laws allowing them do all of the above.
Whether in sports or Seven-Elevens, customers can choose only between high-priced versions of the same thing, just packaged differently, painted another color, pin-striped or polka-dotted. Motorists are allowed choices of new or used cars and little else. Kind of makes the Amish look like mass transit visionaries or retro-radicals.
Although it should be expanding as the community grows, the Citifare bus system was just substantially cut back. Unless you have lots of time to get where you need to go, it's of only marginal utility. The real decisions were made for us almost a century ago. The mythical cowboy romance with a beautiful and well-tempered four-legged critter was transferred to the smelly, smoke-belching beast with four wheels. Rugged individualism mounted a mass-produced missile.
Rather than perpetuating and profiteering off the cowboy myth (which wasn't even original---we stole it from the Spanish), what if we had taken all the money blown on cars and gone another direction? Like a gigantic pneumatic tube system criss-crossing the country.
In an art-deco, low-tech version of "beam me up, Scotty," your grandmother and grandfather could have walked out the front door of their Sparks home in the mid-'30s and arrived in New York for dinner an hour later. What about oysters for lunch on the wharf in San Francisco? Maybe 20 minutes away. No muss, no fuss, no gas, no accidents, no speeding tickets.
We were never allowed that choice. Corporate profit got in the way. Perhaps the ugliest true story of institutionalized greed lies in the tale of the Los Angeles rapid transit system. Never heard of it? They had one of the finest in the country until the late 1940s. Then, Big Oil and Big Autos slowly bought it out, starved it to death and folded it.
Today's southern California freeways lie along the trolley car and train routes. With gridlock now routine, there has been a lot of discussion about re-establishing mass transit on those old pathways, many of which must be repurchased at humongous cost. The few cities which retained their mass transit systems are extremely happy they did.
What Big Autos and Big Oil did in L.A. was not lost on other greedy corporate types. Back in the 1950s, my dear Uncle John served as Reno railroad agent. (Among his more humorous insights: "Sen Pat McCarran was a cheapskate. He used to send his friends crates of oranges he'd been given. But he'd always ship 'em collect! The freight charges were more than the oranges were worth, but all they could say was thanks.")
One day, Uncle John asked me a question. "Andrew, have you ever wondered why, no matter where you go, the Greyhound Bus terminal is always right next to the railway depot?"
Uncle John described a scheme devised by railroads who wanted to have their cake and eat it, too. Hauling freight was much more profitable than hauling people. Took far fewer employees, too. But the railroads just couldn't dump their passenger business overnight. People would get mad, and so would politicians.
So, they came up with a way to keep their fingers in the passenger business but cut well-paid staff and overhead. Big Rail came up with a variation of the same anti-marketing strategy Big Oil and Big Autos had implemented in L.A. They made the rail passenger system so maddeningly inefficient that people stopped using it. There to catch them was Greyhound, running pleasant little jingles all over that new-fangled medium called television. ("It's such a comfort to take the bus and leave the driving to us.")
Now, five decades later, we reap the bitter harvest of those greedy, shortsighted corporate decisions. Brown air. Black lungs. Tens of thousands of highway deaths and billions of dollars worth of injuries and property damage per year. But we are allowed to drive a sporty Aerodynamo Jellybean in our choice of color.
PUMP UP THE VOLUME: Thanks for all the positive response to last week's diatribe on gas pump price fixing. I detailed how the major oil companies, led by ARCO, developed a pricing zone strategy that somehow withstood a court challenge against charges that it violated anti-trust and unfair competition laws.
Slicing up a market into willy-nilly zones opened the door to cut-throat competition. The Bigbux major oil company could thus underprice an independent retailer until that dealer either went out of business or became a distributor for Bigbux.
Last week, a coalition of consumer groups lashed out at the latest gasoline gouging. When Ed Rothschild of Citizen Action decried the shrinkage of competition in southern California, he was trashed as a liar by the president of Chevron Oil. Damned high praise, in my opinion.
In 1992, then-Sacramento city councilman Joe Serna, Jr., proposed an ordinance strengthening the hand of local gas retailers against Big Oil and its predatory practices. The idea really stung the Majors. ARCO, which developed the anti-anti-trust strategy of bogus pricing zones, gave Serna's idea the ultimate compliment: it threatened to withdraw from the Sacramento market.
According to the California Board of Equalization, Sacramento County had 390 service stations in 1985. By 1991, fewer than 300 were doing business. The city of Sacramento went from 146 to 103 in the same period. Local dealers said they were folding up because of the dictatorial demands of the big oil companies. Some were forced to stay open all night, even with the notorious strangler nicknamed the "Thrill Killer" stalking the darkness.
David Nagler of the California Service Station and Automotive Repair Association, said "this ordinance is an attempt to provide for independent retailers here a tool to allow them to fairly deal with multi-national corporations."
Nagler told the Sacramento Bee that owners had come to him with a wide range of problems, from price increases to store hours. Sounding more like a union organizer than a business lobbyist, Nagler asserted that "these unfair bargaining limitations are putting our operators right out of business. There has to be some relief for them."
"The oil companies control our lives," said one station operator who wanted to remain anonymous. "If they heard me complaining, they could up my lease and put me right out of business. They own the land, they decide what services you can offer, they decide how long you can stay open, and there's no two ways about it."
Serna, who went on to become Sacramento mayor, said "right now, those local owners are at the mercy of the big oil companies."
Some city officials said such problems were better left to state or federal governments. (This is the same response big tobacco companies utter when feisty locals try to do something about their dangerous, overpriced products.
They have become masters at passing statewide laws to pre-empt local controls. See "Bob Dole: Marlboro's Man," in the current edition of Mother Jones magazine.)
"I am concerned there really is a fundamental unfairness about how big oil deals with small station owners," Serna said. His proposal would have given dealers stronger rights in negotiating leases with their franchisors. The oil lobby nuked it.
Consumer advocate Rothschild points out that California consumer prices are higher than elsewhere in the nation because four or five major oil companies control 75% of the retail gas business in southern California. The Golden State had more than 20,000 stations in 1972, according to California Service Station and Auto Repair Association executive director Dennis DeCota. Today only about 9,700 remain, he told me from San Francisco.
Big Oil denies that it can control prices, let alone get away with it. As I mentioned last week, oil companies are like both Corsican Brothers, the telepathic siblings in Alexandre Dumas' classic novel. Each knows the other's thinking at all times. Oil companies can fix high prices without conspiring and can legally practice cut-throat competition thanks to their pricing zone strategy. Nice con.
It is thus both comic and ironic that truck drivers are waiting to fill up in Nevada as way to avoid California prices. Washoe County, Nevada, has one of the highest combined gas taxes you'll find anywhere. About 50 cents of the price of every gallon of gas represents various levies, but remains attractive to Californians.
Last week, this theatrical petroleum production progressed from comedy and irony to a farce of false choices. Shell started advertising a Trivial Pursuit contest in an attempt to draw new customers. Shades of the gas wars of the '50s and '60s. As always, no price competition allowed.
With gasoline, everybody really is selling the same thing. All gas brands get to Reno over the same pipeline. One dealer told me "who's to say what or whose gas your getting?" Another told me that buying higher priced, higher octane premium grades is a waste of money. "At Reno's altitude, the benefit is negated," he said.
And so is competition. Non-Big Oil outlets are an endangered species here in northern Nevada.
The pirates almost got a bill through the 1995 Nevada legislative session which would have allowed them to once again sell retail gas. Big Oil legally controls the flow from wellhead to nozzle in California. No major oil-producing state has a "divorcement" law like Nevada's, DeCota told me. Which is not to say our politicians won't sell out. It's just that big state pols were bought first.
When one company controls all levels of production and sale, it's called monopoly. When a few companies corner most of the market, you have oilogopoly. The latest round of gas price gouging shows how this particular game is going. Only you and I keep landing on Boardwalk, and we can't pay the rent with Monopoly money.
Be well. Raise hell.
© Andrew Barbano
Andrew Barbano is a member of Communications Workers of America Local 9413 and editor of U-News, where the past four years of columns may be accessed. Barbwire by Barbano has originated in the Daily Sparks Tribune since 1988.
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