Hogan Zeroes

Tuesday, May 17, 2005


Full of Gas

The Maryland Comptroller in a May 17 letter protests an earlier article in the Washington Post of May 1.

The Comptroller defends Maryland’s gas price control system against a pro-free market author’s claims that the system has helped cause higher gas prices for Marylanders. The law, subject to some theoretically worthy exceptions, basically prohibits retailers from selling gas below cost.

Writes William Donald Schaefer: “[The May 1 article] suggested that Maryland passed a law four years ago to keep gas prices up”.

But he then adds in the next sentence, and I quote (emphasis added):

On the contrary, the law was passed to prevent any retailer from unfairly eliminating competition by selling gas for less than it costs.

The word “contrary” appears to have acquired a brave new meaning.

The operative expression here, minus the purported rationale, is that “the law was passed to prevent any retailer from . . . selling gas for less than it costs.” More narrowly: “to prevent any retailer from . . . selling gas for less. . . .”

Now if the law is designed to prevent gas prices from lowering to where they might want to go, it should be clear that the law has the effect, if not the design, of keeping gas prices UP.

I think the word “consequent” is more appropriate than “contrary”.

Further note: according to the Maryland Comptroller the law is supposed to have the aim of “facilitating competition.” Ah, sorry. The law is, well, to the contrary.

Selling below cost is a classic move of strategic business competition and promotion; prohibiting this is certainly NOT facilitating competition.


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