If you’ve been following my tweets and posts you’ll know that I have been in New York City recently.  One specific tweet addressed something I just didn’t know existed anymore: full-service gas stations.  Apparently, in New Jersey (and Oregon), the only kind of gas station out there is a full-service gas station.

It is the law in New Jersey that an attendant fill up your gas.  Many of you who don’t drive much out of state may need to see that again.  It is against the law for you to pump your own gas.  This is because the state of New Jersey thinks you’re too untrustworthy and stupid to be trusted with this task.  Granted, there is plenty of evidence to support the stupidity of humans at gas stations, but these are exceptions (admittedly funny ones).

To give you an idea of how old these laws are, most of the people that passed them are probably dead now.  In New Jersey it was the gas station industry that lobbied for this to be in place.  But ancient and pathetic laws aren’t enough to make it Weakonomics interesting.  Let’s do that now though.

Proponents of the full-service stations say it helps with employment.  If you gave up on the law lots of people would be laid off.  Well of course.  The same goes for self-checkout at the grocery store.  But the full-service gas station is much more inefficient and adds financial burden on the driver.  The driver has to pay an increased expense in order to help pay the salary of the attendant (plus a tip perhaps).  But, no one notices this because Oregon and New Jersey have cheap gas compared to their neighboring states.  It’s all relative right?  But how can that be?  Gas stations have more expenses and gas is cheaper?

Taxes.  The only two states with lower taxes on gas than NJ are Wyoming and Alaska.  Oregon is lower than all its most populous neighbors.  So the state is reducing a chunk of potential income to help subsidize the attendants.  Without full-service, the drivers of these states could enjoy much lower gas prices or at least the same price with the added benefit of more state funds for roads.

And the roads in New Jersey suck.  The turnpike is in pretty bad shape from a driver’s perspective, that is to say nothing of the congestion.  But what is most interesting is the inefficient trap NJ has put itself in.  The roads are in bad shape because everyone uses them and the tolls aren’t enough to keep them in great shape and less congested.  But low taxes makes for cheap gas and gives people an incentive to drive more.  We all know that higher gas prices reduces the distance we drive.  So NJ could fix this problem by eliminating the tolls and raising gas prices.

But why not just increase tolls?  I don’t have access to the data, but I don’t think higher tolls will cut driving.  People don’t think of tolls as a serious expense like they do with gas.  And with EZPass they’ve made it pretty painless to use toll roads.  But people are sensitive to gas prices.

But won’t people drive more without the tolls?  Not likely since the sensitivity is with gas prices.  Driving might pick up some, but would be reduced too.  Congestion would be reduced without the tolls and damage to the roads would drop too thanks to the reduced driving and/or greater gas tax revenue.

What’s the linchpin?  The attendants.  They are an artificial protection of a dead industry that is protected by laws written by dead people.  The increase in unemployment is likely not measurable from a change in the laws, but the increased gas taxes could be used to fund their unemployment and retraining for a couple of years.

I don’t mean to pick on New Jersey, and I’m not being critical of the state either.  Every state has something stupid like this.  But New Jersey’s is obvious to everyone and they are a state struggling financially.  Fixing an inefficient revenue system (tolls) with one that can actually reduce driving and increase state revenue (gas taxes) can ease the stress.

Image: versageek

Note: I did do some math on how much the gas tax would need to be increased to cover the tolls.  It isn’t much and if someone wants to do it themselves all that data is available online.  But the hard math goes beyond the scope of this blog.

Be Sociable, Share!
categories: business, cars