Collusion confusion

Driving home yesterday, I learned from the radio announcer that gasoline prices had recently gone down because the mayor asked the state AG to look into the reason prices here were higher than elsewhere.

So, it has nothing to do with the fact that oil has plunged the past few weeks?

Checking around to see what the source for this was, I came across this article. It contains several statements that probably made sense to the people making them at the time, but in the larger picture shows how confused people are about gasoline prices.

"This disparity is more so than is normal," Howey said. "The public at large in this city would certainly appreciate a hard, objective look at how prices are set in this city for gasoline and what causes those prices to differ so greatly from the other major metro areas around us (El Paso and Albuquerque). Silver City has even been lower than Cruces in recent months ... . We feel like we are being robbed, but have no voice and no alternative."Las Crucen Wayne Steppings was even more blunt.

"I am appalled that we residents of Las Cruces are subject to the obvious collusion and chicanery being practiced by the gasoline retailers," he said. "... Why is it that we are being forced to pay an average of $2.39 per gallon? Why is it that when prices are adjusted either upward or downward, the gas stations act in concert? Are the retailers getting their supply from the same distributor?

The market clearing price is the market clearing price. Transport and local conditions (supply and demand) vary. Try finding diesel in El Paso - it's difficult. I know all four stations. Try finding it in Las Cruces - it's easy.

And the guy who wants every station to have the exact same retail price believes that the only way they can have the same retail price is if they have the same supplier.

But it gets worse:

An explanation of self-serve gas pricing still wouldn't be enough to satisfy Gretchen Reyes of Doña Ana.

"I really don't want somebody telling me the whys and wherefores about gas prices, I want them the same as everybody else. That's all," said Reyes, a single-mother raising two children. "They (retailers) are always talking about the competition or the cost of delivering it. I just don't buy their rationalizations, especially when there's someplace else, like Deming or Alamogordo, where they're selling gas for $1.99 (a gallon). I don't see how it should cost any more to deliver gas there than it does here."

So, we have collusion, but the only way anyone is going to accept that there is no collusion is for all of the prices throughout the state and/or region to be exactly the same?! Does that actually make sense to them?

As luck would have it, I purchase fuel in Alamogordo frequently. It is almost always more expensive. It used to be less expensive, but then about a dozen years ago something shifted. Now it has shifted back. Is it collusion among the large retailers in LC? Perhaps. But gasoline is now $2 less expensive than it was just a few months ago. It's hard to find a very strong conspiracy in light of that.

It just goes to prove that there is no way for these guys to win (and I really resent having to defend them against this kind of populist nonsense):

If anyone sells lower than market, he is predatory pricing,
if he sells higher, he is gouging,
and if he sells at the same price as everyone else, he is colluding.