The Injustice of what Happens when Gas Prices are Too Low

Exxon Mobile Corp (XOM) is the largest publicly traded oil company in the world. As consumers around the globe continue to watch gas prices soar, Exxon Mobile Corp announces the company's first quarter estimates. During the first three months of 2007, XOM reported a net income of $928 Million! This is a 10% increase in the profits reported in 2006.

On May 2, the price of a barrel of oil closed at $63.68, which was the third day in a row oil prices dropped. Yet gas prices continue to rise across the United States, as well as the rest of the world. Speculations of gas-gouging are increasing in the public's perception.

While normally famous for beautiful views of its beaches, the state of California has other news in the headlines. Schlafer's Automotive, located in Mendocino, is feeling the ramifications of high gas prices. As a small, locally owned business, the station received negative press coverage for selling the nation's highest priced gasoline.

Currently priced at $1 a gallon over the national average, the service station is selling gasoline for $4.24 per gallon for regular. Acknowledging larger companies are selling for less, employee, Bob Felch points out that bigger companies have more foot traffic and bigger tanks which allow bulk purchases. Felch states, "A lot of people complain to us because of the prices. And they think we can drop the prices, but we can't. If we drop our prices, we can't afford to pay for our gasoline." Feeling the pinch, customer Nathan Borges says, "Out in the middle of nowhere, you get stuck in some spots where you have one gas station, and thats the only one so you have to deal with the gas prices."

Even worse than the government's failure to protect the public from instances of price gouging, government officials continue to bolster the tired "supply and demand" theory, in attempts to explain continually rising fuel costs, which leaves the public exasperated. As if the failure to implement regulations on an out of control market is not already enough, consider a government that fines individuals who are attempting to make a difference in their own little corner of the world.

Wisconsin business owner, Raj Bhandari operates a BP station located in Center City. In efforts to reduce his customer's costs, Bhandari offered senior citizens a 2 cent per gallon price break. Furthering his efforts, the community-minded business owner teamed up with youth sports organizations.

Sports teams sell booster cards that include discounts to local businesses as a means of raising funds. Bhandari's BP station offered a 3 cent per gallon discount on the card. Customer, Dale Van Camp said he purchased the $50 card to support the youth hockey program in the community. An added benefit, the card would have saved him an estimated $100 on gas over the course of the year. He appreciates the cheap gas prices.

However, Wisconsin's Department of Agriculture, Trade and Consumer Protection claims the special discounts are in violation of Wisconsin's Unfair Sales Act. The Act stipulates stations must sell gas to customers for about 9.2 percent over the wholesale price. Bhandari said he was notified by the state auditor in a letter insisting the state would sue him if he did not increase the gasoline rates. Via this lawsuit, the state of Wisconsin can issue a penalty for discounted gallons of gas the station sells. The fine for this offense will be set by a judge. Bhandari has been officially warned to stop selling the cheap gas.

As an American consumer, I am outraged that the government has placed a higher priority on fining a local business owner who supports his community rather than halting the extraordinarily high net income of nearly $1 billion in three months. This lack-luster group of leaders should demand that refineries are built with the record breaking profits which continue to drain the average American's wallet. Perhaps the country would be better served by a government in which leaders demand solutions to the supply of fuel instead of the current administration which continues to spout "supply and demand" nonsense.