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Almost Like Price Fixing

The oil company executives who were paraded before a Congressional hearing last week uniformly offered the same message.

Don’t blame us for high gas prices. Blame the law of supply and demand; “market forces” at work.

Except that, when it comes to the retail end of things, they have a big hand in those “market forces”.

Every time Sohaila Rezazadeh rings up a sale at her Exxon station on Chain Bridge Road in Oakton, her cash register sends the information to Exxon Mobil’s central computers. If she raises the price of gasoline a couple of pennies, chances are that Exxon will raise the wholesale price she pays by the same amount.

Credit-card fees are eating her profit margins. Exxon, which owns the station land, last week handed Rezazadeh a new lease raising her rent about 30 percent over the next three years.

The high prices are not as disturbing as what seems to be the price fixing illustrated in this story.

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2 Comments

  1. Um, how is that price fixing?
    If the consumer is willing to pay more for the product, and increased sales are evidence of that, how is rising the price to reflect an increase in demand price fixing?

  2. Dave

    I have a friend who works for Quik Trip, and it sounds like they do some amazing things. They -always- have the lowest price because they make so much money in their store. They make lots of money in their store because they have high standards of cleanliness and design, lots of variety, and they pay their employees well (and give them lots of safety assurance tools). As a company they make smart decisions, too. For example, they realized that credit card fees were costing several cents for every dollar they made, so they’re going to roll out their own credit cards and pass a significant part of those few cents per dollar of savings on to the customers — a real everyone wins situation.

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