Gasoline Prices

There are two ways whereby prices can be established--one by competitive bidding and offering, and the other by political or private regulation. Both methods have their advantages and disadvantages. Many large companies here in all fields of business tried to regulate their selling prices so as to eliminate frequent or large changes, and to promote price-stabilization. But unless the prices so stabilized accord with economic conditions, they are always likely to experience sharp, disagreeable and sometimes very expensive jolts.

Recent development in the gasoline business would have interested John Stewart Mill--they illustrate many of his cardinal economic tenets. Gasoline refiners and distributors have attempted to promote "price-stability," and at rates quite profitable to themselves. But out in California many companies were growing tired of carrying vast stocks of crude oil. When the "stabilizers" got the price of gasoline up to high levels--the east, the California independents accordingly refined their oil, shipped the gasoline cheaply through Panama, and started a lively price-war in the Atlantic seaboard states. The Standard Oil companies were forced to meet the cuts by lowering their own tank wagon prices. Thus "price stabilization's" apple cart has been neatly spilled.

As far as the situation contains any moral, it seems to be that using the popular slogan of "price-stabilization" to cover prices which from an economic standpoint are too high, is a poor policy to follow in the oil business. Once the United States oil industry was practically a monopoly and could do about as it pleased in the prices. That, however, was several years ago.