Jersey Strong…but not strong enough to pump gas
No, the whole state doesn’t smell like that and no, exceedingly few people are actually in the Mafia. The Jersey Shore kids not only don’t reflect the sublime beauty of our 100 miles of coastline, but with I believe only one exception, they’re not even from Jersey. Yes, Bruce Springsteen is a musical genius and Taylor-brand pork roll is a delicious foodstuff and jug-handles just make good sense as a highway traffic pattern.
Where I am at a loss is when I’m called on to defend New Jersey’s now decades-long ignominy as one of just two states (Oregon is the other) to employ one of the dumbest laws in the country: a complete ban on self-service at gas stations. Indeed, not only does this ludicrous regulation persist, but it remains, by all measures, wildly popular.
This is the lesson the state’s lawmakers repeatedly learn when, about once a decade, one or two of them sticks their neck out to question why New Jerseyans could not be trusted to complete the kind of simple transaction that 300 million other Americans manage to perform every single day without incident.
The most recent brave souls are state Sens. Gerald Cardinale, R-Cresskill, and Paul Sarlo, D-Wood-Ridge, who introduced a bill that, after a three-year trial period during which stations would be required to continue offering a full-service option, would allow stations who chose to do so to offer self-serve. After briefly appearing like it just might have some momentum, the Cardinale-Sarlo measure now finds itself in the same legislative buzz saw that has doomed so many efforts before.
‘As long as I am Senate president, the ban on self-serve will stay in place,’ [state Sen. Steve] Sweeney said in a statement. ‘The people in New Jersey like the convenience of people pumping their gas,’ he added later in a phone interview. ‘I’ve gotten plenty of people saying, ‘Please don’t do this.’
As the leader of the Senate, Sweeney has the ability to block the bill. ‘We just don’t post it for a vote,’ he said.
A gander at any comments section attached to news articles covering the issue offers evidence that Sweeney probably isn’t wrong. The people of New Jersey, by and large, just flat-out hate the idea of self-service gas. The big question is why.
Indeed, the public choice mode of analysis – in which one generally asks of any given policy, particularly a seemingly unusual one, cui bono? – offers few obvious answers. There simply is no organized group actively lobbying to preserve the law.
Though proposals to strike the ban often are met by warnings of catastrophic job losses (in New Jersey, there are currently about 5,000 gas station attendants, most of them part-time), not even in an organized labor capital like the Garden State are attendants generally members of any formal union. In any case, there is no labor union engaged on the bill, pro or con.
Similarly, while such proposals often are greeted by claims that shifting to self-service will disadvantage the disabled, the American Association for People with Disabilities takes no position on the New Jersey law. It would like to see better enforcement of service station-related provisions in the federal Americans with Disabilities Act, but such provisions would apply to self-service in New Jersey, just as they already do in the other 48 states that permit it.
The origins of New Jersey’s ban on self-service gasoline began, as these things often do, in a price-fixing scheme. In a 2008 column, Star-Ledger columnist Paul Mulshine recounted the tale that led the New Jersey Legislature to pass the Retail Gasoline Dispensing Safety Act in 1949.
It was Irving Reingold who created the crisis that led to the law banning self-serve gasoline. Reingold, a workaholic who took time out only to fly his collection of World War II fighter planes, started the crisis by doing something gas station owners hated: He lowered prices. Fifty-one years ago, gas was selling at 21.9 cents a gallon.
Reingold decided to offer the consumer a choice by opening up a 24-pump gas station on Route 17 in Hackensack. He offered gas at 18.9 cents a gallon. The only requirement was that drivers pump it themselves. They didn’t mind. They lined up for blocks.
The other gas station operators didn’t like the competition. Someone tried shooting up Reingold’s station. But he installed bulletproof glass, so the retailers looked for a softer target – the Statehouse. The Gasoline Retailers Association prevailed upon its pals in the Legislature to push through a bill banning self-serve gas. The pretext was safety, but the Hackensack fire chief had already told all who would listen that Reingold’s operation was perfectly safe.
The bill sailed through in record time, despite the objections of everyone who cared about the public interest. Journalists howled. ‘Chalk up another victory for the organized pressure groups,’ said WOR radio commentator Lyle Van.
New Jersey may have been early to the game of bowing to the station owners’ cartel, but it was not alone. By 1968, 23 states had passed laws banning self-service gas stations. Though often promoted with the public façade that such measures were about “protecting public safety,” the overwhelming political motivation was pressure from independent service stations, who sought to hold off growing competition from stations owned by the major gasoline refiners.
Of course, fast forward to 1992, and New Jersey and Oregon were the only remaining states that still banned self-service gas. Obviously, much changed in the intervening years. Credit cards became ubiquitous. The oil crisis of 1973 led to laws requiring stations to post their prices (during the crisis, it was not uncommon for the price to double or even triple while a customer was waiting in block-long lines.) And major oil companies’ interest in owning filling stations began to wane. Self-service went from 1 percent of the market in 1968 to 80 percent of the market in 1992. Today, it’s nearly 90 percent.
But perhaps the most significant change is that independent station owners, the kind who fought to create the law in the first place, now would like to see its demise.
In a May 19 statement, Sal Risalvato, executive director of the New Jersey Gasoline, Convenience Store and Automotive Association, owned up to his group’s history of standing as a roadblock to overturning the law, before going on to explain how changing market dynamics have turned the industry around on the issue. Among the issues Risalvato says striking down the ban would help to address is broadening fuel availability at night, when many stations close because employing an attendant isn’t financially viable. Moreover, just over the horizon, his members see changes in the credit card industry making the current ban largely a moot point.
By October 2017, every gas pump will have to be outfitted with new credit card processors capable of accepting EMV, the new chip-based security standard. According to the credit card companies, customers will be asked to input their PIN when they use their credit card at the pump. Since I don’t foresee many motorists providing their PIN to a gas station attendant, motorists wishing to use credit are likely going to be getting out of their cars anyway. At that point, most would just as well go to the self-serve island, save a few cents a gallon, and pump the gas themselves.
While there hasn’t been much research into the effects of the New Jersey and Oregon bans, a pair of noteworthy reports from the turn of the 21st century help illuminate the broader dilemma facing New Jersey station owners.
A November 2000 paper in The Review of Economics and Statistics by Ronald N. Johnson of Montana State University and Charles J. Romeo of the U.S. Justice Department found that New Jersey and Oregon’s bans on self-service raised average gas prices by 3 to 5 cents per gallon, but the even bigger effect was seen in “slowing the penetration of convenience store tie-ins.”
A follow-up paper appearing in the March 2001 edition of the Journal of Consumer Policy, authored by Donald Vandegrift of the College of New Jersey and Joseph A. Bisti of the Philadelphia Electric Co., supported that conclusion, positing that, because capital-labor ratios are lower for New Jersey stations, the law makes it more cost-effective to invest in labor-intensive services like auto repair than in capital-intensive services like convenience stores.
Those findings may actually be even more relevant today than they were 15 years ago. According to the National Association of Convenience Stores, convenience stores now account for 80 percent of all the fuel sold in the United States, with 82 percent of the nation’s convenience stores engaged in the retail fuel business. By contrast, just 48 percent of New Jersey’s convenience stores sell gas, the lowest rate in the nation. At 65 percent, Oregon ranks fifth-lowest.
This is noteworthy, because while fuel sales account for about two-thirds of the convenience store industry’s revenues, they contribute only about a quarter of its profits. After swipe fees, taxes and other expenses are subtracted, average station profit margins on the sale of gas are just 3 to 5 cents per gallon — roughly the same amount it costs to employ the gas jockeys.
Reflecting on those numbers, it becomes clear why the claim that the self-service ban “saves jobs” is so spectacularly wrong-headed. While true in the trivial sense that the “job” of filling people’s gas tanks would be rendered unnecessary if consumers prefer to save a few cents and do it themselves, maintaining a regulation that effectively forces gas stations to lose money on selling gas cannot be in anyone’s best interests, including (perhaps especially) gas station employees.
Of course, another reason not to lament the loss of gas station attendant jobs, any more than elevator operators or buggy whip manufacturers before them, is that these are uniquely terrible jobs. Not just in the sense that they are grueling and low-paid, but in the much more important sense that they are likely to kill you.
A study of Italian gas station attendants from 1981 through 1992, published in the October 1994 edition of the Scandinavian Journal of Work, Environment & Health found that “filling station attendants are exposed to gasoline vapors and seem at risk of cancer of various sites,” with particular susceptibility to esophageal cancer, brain cancer and Non-Hodgkin lymphoma.
Those results were later echoed in a 1997 case study by researchers with the Centers for Disease Control and Prevention’s National Institute for Occupational Safety & Health, who found that service station attendants were exposed to abnormally high levels of gas fumes containing methyl tert-butyl, a possible carcinogen. The cohort NIOSH studied were gas station attendants in Newark, N.J.
Alas, when New Jerseyans look at their favorite quirky local law, they see neither the ways that it leaves them with crappy convenience store options, nor how the jobs they insist they want to save might be killing the people who perform them. What they do see turns out to be the only thing that matters: New Jersey has cheap gas.
Were it not the case that New Jerseyans pay less for gas than their neighbors, efforts to change the law might by now have grown into a groundswell. But as it is, the price at the pump is cheaper in New Jersey than most other places, for the simple reason that the state has unusually low gas taxes.
In fact, New Jersey’s total gasoline-related taxes and fees of 14.5 cents per gallon are the second-lowest in the nation, behind only oil-rich Alaska’s 11.3 cents per gallon. In comparison, New Jersey’s neighbors New York and Pennsylvania assess taxes and fees of 44.46 and 51.6 cents per gallon, respectively. According to the American Petroleum Institute, New Jersey is the only state in the entire Northeast with gas taxes of less than 40 cents per gallon. The national average is 48.85 cents per gallon.
What makes such low gas taxes possible is that New Jersey long has been far more reliant on highway tolls than other states. New Jersey has 30 toll roads, second only to Florida’s 35. (Of course, those 35 Florida toll roads are in a state with 2.2 times the population and 7.5 times the landmass of New Jersey.) In 2012, the New Jersey Turnpike alone collected almost $1 billion in tolls, making it the most profitable toll road in the nation.
Thus, when it comes down to it, one can hardly blame New Jerseyans for failing to see the downsides of this remarkably terrible law. With cheaper gas than their neighbors and the cost of highway maintenance largely divorced from the price they pay at the pump, they see no advantage to changing the status quo. They see only a chore they’ve never before had to perform and they don’t intend to start now.