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Sounding Board: Gas Gouging

Daily Transcript Question: Is the city's recently passed gas gouging bill responsible public policy?

I find it slightly humorous and very troubling that a City Council that has done such a poor job of managing the city government and its finances has the audacity to venture into another area such as the regulation of the gasoline market.

First, this City Council should be focused on only one issue: restoring the city's financial health. No other issue can be more important than that. Second, the city got into its financial mess by not focusing on core city services: public safety, street repairs, public utilities and libraries. Instead, it has expanded its focus and expenditures into mandating what local employers pay their workers, hosting of sports teams and political conventions and now energy regulation. Finally, the state and federal governments have statutes, regulations and enforcement mechanisms to prevent gas gouging. The city need not step in the middle of this issue.

Let's hold the federal government accountable to do its job in this area and get back to the important task of restoring the city's fiscal health so we can provide quality services to our residents. Once the San Diego City Council can manage that basic function, then they can offer to help the nation with the cost of gas.

--Carl DeMaio

President and founder, Performance Institute

Gasoline is supply and demand: Prices will come down now due to Katrina. There are two states, Alabama and Mississippi, and a major metropolitan area (New Orleans) that are not using gasoline mainly because they can't get it. The city ordinance is just politics. If they really wanted to help the public, they would reduce the local tax on a gallon of gas. Every time I fill up at Costco, I read the tax sticker on the pump:

18 cents a gallon federal tax;

18 cents a gallon state tax;

7.75 per cent a gallon local tax.

Now if you were getting a percentage on each gallon sold, would you rather get it on $2/gallon or $3/gallon?

To reduce the price of gasoline you must reduce the demand. This is something that the American consumer can't seem to grasp. Until they do, we are at the mercy of the fact that two thirds of the oil that we use each year is imported. The states can help by getting the EPA equivalent in each state to get together with all the other states and come up with a single formulation for gasoline to be used throughout the country.

If these things don't happen, then we will get the standard "after Labor Day" dip and all be up over $3/galllon by next summer.

--Mark Bigley

San Diego resident

Here we go again. San Diego politicos and a rogue city attorney get together to "fix" something of which they have very limited understanding. The economics of energy price dynamics are so far out of the sphere of our local elected officials' grasp they may as well be performing brain surgery considering the effects of their efforts.

It is obvious to everyone but them that they are at the helm of the SS Sinking City and their respective childish wrangling and political posturing is akin to Nero's fiddling. For a group that thinks oligopoly is a board game; tinkering with market forces of the complexities of oil and gasoline is more of a crime than the waste of time and effort they have spent and will spend on this malfeasance.

It is no surprise that Donna Frye wants to control market forces as she has, and continues to, proffer her disdain of capitalism in any form.

Yes, people will attempt to take advantage of unfortunate situations but it is not an inept group of local politicians' task to perform ethical surgery on the system.

Thank you for thinking of us but your time is better spent on the problems we do have, not the ones we might have.

--Alan Aiello

Principal with Evergreen Wealth Management

The gas-gouging ordinance recently passed by the City Council mirrors the California Penal Code Section 396. This long-standing state law basically provides that merchants/contractors/lodging owners cannot raise their prices more than 10 per cent past what they were immediately prior to the disaster, without clear showing that a price increase of 10 per cent or greater is directly related to cost of supplies or cost of providing the service due to the disaster circumstances. In a word, it prevents profiteering during an emergency.

The question facing local policy makers was whether San Diego should have an ordinance that mirrors California law and similar anti-profiteering laws throughout the nation. The answer was a no-brainer: Of course! San Diegans should be no more exposed to repugnant profiteering than any other American citizen. In the midst of an emergency, the "invisible hand" of a marketplace is paralyzed because of some unanticipated event. During these times, consumers cannot rely upon a competitive market to provide reasonably priced goods and services.

So, then one might reasonably ask, why couldn't we rely upon the state's current law. The answer is that there was some evidence that the state might be reluctant to act and, if it did, this ordinance would serve as a useful backstop. The recent round of gasoline price gouging by refiners and vertically integrated oil companies was a painful but important example of the state's sloth. The governor declined to take any action against oil company gouging leaving municipalities to fend for themselves.

San Diego's action was a meaningful one in that it sent an unmistakable and forceful message to the oil companies that they were being watched. The city's use of its bully pulpit against these oily bullies was a very appropriate use of government power. If an oil company, or an individual gasoline station owner, was considering abusing the marketplace, San Diego gave those companies reason to pause.

Did it work? It might be too early to jump to any conclusion. But I will note that of the 53 complaints received at UCAN's offices by San Diegans, all but two were about gas stations located outside of the borders of the city of San Diego. In all likelihood the message was heard, loud and clear.

--Michael Shames

Executive director, Utility Consumers' Action Network

The Daily Transcript introduces Sounding Board, a regular opinion page feature focusing on current issues. The Daily Transcript will engage community leaders in a dialogue and publish their comments. Readers' comments are also welcome. Send your responses to soundingboard@sddt.com.

Previous Sounding Boards:

Affordable Housing IV/Gas Gouging (Sep. 13, 2005)

Affordable Housing III (Sep. 12, 2005)

Affordable Housing II (Sep. 9, 2005)

Affordable Housing I (Sep. 8, 2005)

Top Priorities (Sep. 7, 2005)

Initial Actions (Sep. 6, 2005)

Financial Remedies (Sep. 2, 2005)

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