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Why Do Gas Stations Post Their Outrageous Prices? Because, Well, They Always Have

These enraging signs are everywhere, but why?
When gas prices go up, we all know about it because the grim truth is right there on every street corner. Gas stations are the only businesses that virtually always post their prices outside in big block letters, with the result that even a nickel uptick registers in the anger and pain centers of the consumer's brain.

The signage, which becomes distinctly negative advertising when prices top $4 a gallon, is ubiquitous, but it turns out that many stations do it because, well, because they've always done it. It's not actually required by federal law -- just by some states.

A gas sign photo invariably accompanies stories on pain at the pumps (like this one), and the read-it-and-weep numbers are a constant reminder that -- even if you don't need gas now -- you soon will, and it's going to hurt.

Murky origins
Calls to the trade associations produced a lot of head-scratching about the origins of posted gas prices. According to Brandon Wright, a regulatory affairs manager at the Petroleum Marketers Association of America:

That's a good question. I think it goes back to the early 1900s when service stations started to compete on price and service. I'm not aware of any national requirement. But the effect can be terrible, because it throws the price into the public's face.
Jeff Lenard, a spokesman for the National Association of Convenience Stores (80 percent of which sell gasoline), agreed that the signs aggravate motorists:
It's like a migraine, a constant pounding in your head. Just when you get the price out of your head you drive by the next station and there it is again -- it's a big pain point. And there's also the fact that the price spins by as you pump the gas. That's like eating a restaurant steak and seeing a sign flash "$3.75" every time you take a bite.
A patchwork of state laws
Lenard didn't know what the law requires, either, but he found out for me, reporting back that the feds leave the subject alone. Instead, a "patchwork" of state laws requires gas stations to display prices. So many retailers post the information voluntarily, but Lenard pointed to at least one that doesn't -- near the airport in Orlando, Fla., and it withholds the information because the price is over $5 a gallon. "I can't defend those prices," Lenard said. Other retailers use electronic signs that alternate gas data with the price of a gallon of milk, and this actually increases sales of both commodities, Leonard said.

Kirk McCauley, a 31-year Maryland gas station operator who's now a spokesman for the Service Station Dealers of America, faxed me details of Maryland's law, which requires posting of "the lowest price for a whole measurement unit of regular and mid-grade gasoline sold on the premises." The size of the lettering is specified. "We post prices in Maryland because it's the law," he said.

It's unclear how many states have similar mandates. New York requires signs, but other states -- including Florida and Colorado -- definitely don't. But outrage over that Orlando station not posting its exorbitant prices led city officials to kick off a still-pending effort to require signs. In New Jersey, a bill enacted last month requires stations that post cash prices to also show credit card prices if they're higher. State Senator Shirley Turner, who originated the bill, said it's personal -- she was filling up when she learned that her gas was going to cost more than what it said on the sign. She told the Star-Ledger:

The pain is excruciating now at the pump, so if someone is going to be charged 10 cents more a gallon because you are paying with a credit card, we should at least be aware of that.
Before electronic signs, gas station owners posting their prices sometimes ran out of digits -- such as the 2s needed when the unthinkable happened and fuel went over $2 a gallon, or the 4s that were in short supply at $4 a gallon in 2008.

McCauley says that states that do have gas price posting laws enact them so "customers don't have to run around to five stations to find the best price." According to Lenard, 70 percent of consumers shop for gas on the basis of price, and 36 percent will drive five minutes out of their way to save three cents a gallon. "People waste more money than they save that way, but it's human nature," McCauley said.


Photo: Flickr/Ekornblut
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