Who’s afraid of lower gas prices? 

Colorado Springs Gazette Editorial

5/16/07 

      Amid renewed forecasts of $3-a-gallon gas later this year, it’s no surprise that savvy politicians — and even the not-so-savvy — are lining up behind an effort to cut prices at the pump in Colorado. And all it will take is an adjustment to an obscure and outdated provision in state law that bars certain retailers from below-cost sales of gasoline.

      Most legislators understand that a statute that abets gasprice gouging has got to go. That’s why both the state House and Senate have overwhelmingly endorsed House Bill 1208, which allows the likes of Safeway or King Soopers to offer discounts on gasoline and prescription drugs. The bill does so by exempting retailers from the state’s Unfair Practices Act, enacted amid the New-Deal 1930s as a balm to people who distrusted and feared Big Business. These days, though a paranoia in regard to “Big Anything” lingers, people are more likely to fear sticker shock at the gas pumps.

      Unfortunately, legislators significantly watered down the measure in the Senate on Wednesday, by limiting its scope to counties with 200,000 or more inhabitants. That’s only the two major metropolitan areas of our state. In a statement, Attorney General John Suthers said the changes would make it illegal to sell gas and other items at below cost outside the Front Range, which would be unfair to Coloradans elsewhere. “With the amendment, the Senate has declared that residents in rural Colorado counties are not entitled to the benefits of aggressive price competition, even where such competition could not possibly lead to the creation of a monopoly,” said Suthers. “This action has corrupted the legislation, and I seriously hope the Legislature corrects its mistake.”

      We hope so, too.

      Before the weakened product passed the Senate on a nearunanimous vote, however, one senator insisted on making a curious last stand against it. The Pikes Peak region’s John Morse, a Democrat and first-time officeholder who represents west-central and southeastern Colorado Springs, took the podium to rail against the bill and wound up casting the lone vote against it.

      In a lengthy soliloquy that reportedly even had members of his own party fidgeting and cringing, Morse characterized gas discounts by big retailers as an attack on the proverbial little guy. He told his fellow lawmakers the bill “sanctions unfair competition” and that “it makes little sense to authorize businesses to sell their products at less than their cost.”

      But where’s the problem? Businesses discount the price of one product, possibly foregoing profits, to attract customers and get an edge on the competition — it all sounds like free market capitalism to us. If consumers benefit as a result, and it doesn’t contribute to monopoly, the state has no business meddling.

      Morse acknowledged it’s unclear whether small businesses close because of “predatory pricing” by oft-maligned “big box” stores, or simply because of “economies of scale.” In other words, it’s possible that bigger businesses — which were once small businesses — are just more efficient. Yikes, that has to stop!

      In a nutshell, Morse’s position is this: How dare a big company use some of its earnings to subsidize cheap gas and prescription drugs for the public! They’ll hook us on their cheap products, saving our communities untold millions of dollars a year, and then . . . and then . . . and then what?

      Morse and others never seem able to take that argument any further than hinting ominously at some scenario in which big businesses, after running off smaller competitors, jack up their prices and hold everyone hostage. But where has that actually happened? It’s a doomsday scenario that exists only in podium-pounding speeches.

      Let’s hope the House restores the bill to its former scope, applying it to all of Colorado’s counties, when the lower chamber gets a second crack at it. Let’s also hope Morse gets himself an economics textbook and a better speechwriter, so he sounds less like an overwrought college sophomore channeling Noam Chomsky.