An economics lesson for Nick Picerno

I read the item in today’s Pilot about County Commissioner Nick Picerno’s  concern about gas prices in Moore County with one part amusement and one part dismay:

Nick Picerno wants to know what some people mean when they refer to a Moore County gas tax.

The chairman told fellow members of the board of commissioners Tuesday that he is puzzled by comments about “a county gas tax” by commenters on The Pilot’s website.

“If there is a tax, I’m not aware of it,” Picerno said near the end of the board’s regular meeting.

However, Picerno said he too is puzzled about why gas prices are higher in Moore County than they are in some neighboring counties. He asked County Manager Cary McSwain to make inquiries into the issue.

Okay.  Where do I begin?

First, I don’t believe “gas prices” comes under the jurisdiction of The Moore County Board of Commissioners.

Second,  people who post on the Internet under pseudonyms (fake names) are NOT your best, most reliable sources of information.  (For the record, I am posting under my real name.)

Third,  the fuel retailers association has stickers on just about every gas pump I’ve seen in Moore County.  Those stickers detail how much drivers pay per gallon in taxes —  state and federal gas taxes.  According to those stickers, North Carolina drivers pay higher taxes per gallon than any other state in the southeastern Atlantic seaboard.

Fourth,  gas — like most commodities in our capitalist system — is priced in accordance with the law of supply and demand.  Prices go up when demand is high and supply is dwindling.  Prices come down when demand is low and there is a surplus of supply.  Stations in high traffic areas tend to have higher prices because their supply dwindles a lot faster than those stations located in lower-traffic areas.  Ever notice how stations right next to  U.S. 15-501, NC 211, U.S. 1, or I-40 or I-95 tend to have higher prices than those in — say — Robbins or southern Lee County?

Fifth,  gas prices get affected by A LOT of factors outside of Moore County, Raleigh, and Washington: natural disasters which affect oil refining and drilling operations, unrest in the Middle East and other lucrative oil production areas,  federal regulations about fuel mixes and the like, and speculators, among others.

Sixth:  Unless a station is owned by an oil distributor, it is UNFAIR to criticize individual station owners.  I’ve actually talked with some friends who are independent station owners. They tell me they are simply trying to break even, after paying taxes and the oil company’s fee for supplying gas. The price at an individual station depends A LOT on where the station gets its gas from.  (I don’t know how much freedom / choice individual store owners have to shop around for fuel distributors.)

Most independent station owners make very little – if any money — on gas, but try to make up for it inside the convenience store.  Have you checked the prices within a convenience store — as compared to a grocery store — lately?   Movie theater owners have the same dilemma.  They make little to no money on ticket sales.  That money goes to the film distributors.  The owner’s revenue comes from those $5.00 Cokes at the refreshment stand. 

I know Mr. Picerno is simply being a good politician and responding to questions from constituents.  But if you are REALLY concerned about the price of gas, start putting pressure on our legislators and our members of Congress to CUT BACK the tax on gasoline.