Gas price could fall below cost in N.J.

Published: Saturday, June 07, 2008

A bill allowing gas stations to sell gas below cost could ease pain at the pump but threaten small New Jersey businesses.Assemblyman John Burzichelli, D-Salem, Gloucester, Cumberland, guided the legislation through the Assembly Consumer Affairs Committee on Thursday. It would eliminate gas price floors that require gas stations to sell above cost.

Enacted during the Great Depression, the regulations were originally intended to protect fuel sales from being monopolized by big business. Burzichelli said he no longer sees that as an issue.

“It is time for state gas pricing laws to catch up to speed with the times,” said Burzichelli. “New Jersey’s current law is a holdover from a time when consumers had few options as to where they could buy gas and monopolistic companies could manipulate prices to run roughshod over the marketplace. With the sheer number of choices available to motorists today, consumers should be able to decide for themselves the acceptable price of a fill-up.”

Some consumers agree. Sachin Ahuja, of Toms River, who was filling up at a Super Wawa in Egg Harbor Township, said that he is in favor of measures lowering gas prices. “Since gas is connected to everything, if gas prices go down, inflation will probably go down too,” he said.

However, small gas station owners see it differently.Ranjit Dhaliwal, owner of the Gulf on the White Horse Pike in Absecon for the past 19 years, is staunchly against the bill. “[Legislators] want to put small business out of business,” he said. He sees the convenience stores and repair shops of bigger businesses as a threat to small-station owners if the bill is approved.

“We are a gas-and-go, just a gas-and-go competing with Wawa, who sells under-cost and has stores inside.”

Dhaliwal’s concerns are not unfounded. Burzichelli noted that service stations with convenience stores or auto-repair shops make the bulk of their revenue from those more profitable services, not the sale of gasoline.

Returning from a four-month vacation, Krish Patel was unaware of the new legislation. The Mays Landing Lukoil gas station owner said that under the circumstances of the bill, his business would be “ruined”.

Relying on the sale of gas per gallon, Patel said soaring gas prices have hurt his business. Whereas he used to sell 180,000 to 200,000 gallons daily, today it is down to 150,000. With employee salaries, a mortgage and bill payments, Patel sees his future as bleak upon passage of the bill, “If they go below price, then I’m done and there’s nothing I can do about it,” he said.

Patel recalled a recent meeting he had with Lukoil corporation representatives that outlined their strategy as being pennies ahead of the competition while still maintaining their quality. Still, Patel is doubtful, saying that profiting at least 10-12 cents per gallon is the only way his business can survive. “With prices as they are, people are not looking for quality, they are looking for cheap,” he said.

Tanoia Davis, whose car was idling in a five-car line at the SAM’s Club pump in Pleasantville, found herself torn on the issue. “The big businesses seem to crush the little guy all the time, and I don’t want to see the little guy crushed,” said the Atlantic City resident. “But at the same time, I’m like any other consumer – I want reasonable gas prices.”

The Assembly Consumer Affairs Committee released the gas-cost bill 3-1 with one abstention. It now heads to the Assembly Speaker, who decides if and when to post it for a floor vote.

Dhaliwal says he has a better idea. He suggests the state impose a fixed minimum profit on gas similar to those on milk and cigarettes. Such a measure would yield businesses a 5-6 percent profit per each gallon sold.

He sees his suggestion as a good alternative legislators should take into consideration. “They should,” he said. “If small businesses are going to survive, the state has to do something.”