Once again I am going to
steal borrow an idea that a friend has used on his blog. He calls the series “Stupid Letters to the Editor.” For me, it is just a case where a letter to the editor of the local newspaper demonstrates the idiocy of the writer.
Lord knows that in this day and age, despite the wealth of readily available information that is quickly and easily accessible, there never seems to be a shortage of people who are willing to expose their stupidity and ignorance for all the world to see. Not only that, their stupidity and ignorance will be preserved for all time. That is not a legacy I would want, but apparently many people do.
Today’s contestant is Alice E. Tisthammer of Cocoa, Florida who somehow managed to come up with this missive that appeared in the Florida Today Newspaper on May 1, 2011:
File complaints if you observe gas gouging
One morning late last week, I noticed all three gas stations I passed had raised their price for regular unleaded gas a minimum of 6 cents per gallon overnight.
I suspect they were trying to take advantage of the record crowds expected in the area for Friday’s shuttle launch. If you noticed the same thing, I urge you to file a complaint with the state for gouging, which is against the law.
I think we pay too much for gasoline as it is, especially with oil companies reaping record profits, so I’ve filled out complaint forms with the state Division of Consumer Services for the three stations I passed this morning.
If you’d like to do the same, the complaint form is available online at www.800helpfla.com/complnt.html. If you don’t care to take the time to complain, then you deserve what you get, in my not-so-humble opinion.
Alice E. Tisthammer
Alice believes that the gas stations are guilty of “price gouging” because they raised their prices over night. We won’t get into the idea that most stores and retail operations raise prices overnight so there is a delineation in prices from one day to another. Her charge of “price gouging” and the accusations that raising prices is against the law is simply not true.
Here in the Sunshine State of Florida, “price gouging” is indeed against the law and defined by section 501.160 of the Florida Statutes.
The section starts by saying:
(1) As used in this section:
(a) “Commodity” means any goods, services, materials, merchandise, supplies, equipment, resources, or other article of commerce, and includes, without limitation, food, water, ice, chemicals, petroleum products, and lumber necessary for consumption or use as a direct result of the emergency. (emphasis mine)
Right off the bat, Alice doesn’t understand that by law, “price gouging” can only take place in a time of emergency, such as before or after a hurricane, or some other disaster. Her theory that the stores raised the prices on gasoline simply because of the impending launch of the shuttle Endeavour doesn’t pass the legal test or definition of “price gouging.”
The State Attorney’s web page gives this:
1. What is Price Gouging?
Florida Statute 501.160 states that during a state of emergency, it is unlawful to sell, lease, offer to sell, or offer for lease essential commodities, dwelling units, or self-storage facilities for an amount that grossly exceeds the average price for that commodity during the 30 days before the declaration of the state of emergency, unless the seller can justifying the price by showing increases in its prices or market trends. Examples of necessary commodities are food, ice, gas, and lumber.
Alice’s complaint has no legal grounds but her ignorance didn’t stop her from writing and it didn’t stop the Florida Today from publishing the letter even though they should know better as well.
Furthermore, as the Heritage Foundation notes:
“In the case of oil and gasoline, higher prices induce producers to increase supply—precisely what’s needed to alleviate shortages. But, with the threat of fines and jail time if they charge ‘too much,’ producers will be reluctant to respond to the higher market prices. Consequently, the shortages persist or worsen.”
This type of government price control, via heated presidential rhetoric, usually makes the situation worse, not better—as we saw in the Carter Administration, when artificially low prices caused shortages and gas lines. Yes, consumers need to be protected, but price gouging is not the cause of the high gas prices, and the President knows it.
Alice then drops into the tired rhetoric that oil companies make too much money. “Record profits” mean that companies are charging too much.
Exxon-Mobile is usually the company that is targeted by people such as Alice for making too much money. Let’s be clear about something. Exxon-Mobile is a publicly held company. That means it is accountable to its shareholders including people that are retired or funds that rely on dividends from Exxon-Mobile that comprise retirement funds. This is not a case of a “zero sum gain.” For every penny that Alice wants to take away from the “evil oil companies” she “thinks” make too much profit, she is depriving someone else of money in their pocket. Alice sees only the numbers and does not see the actual people who rely on the profits and dividends from Exxon-Mobile to survive now and in the future.
That being said, as a publicly traded company, Exxon-Mobile’s books are open to investors and are available for scrutiny by the Federal government. Tired of being attacked by the president, the left and clueless people such as Alice, Exxon-Mobile has fired a shot across the bow of those people and their sheer, utter, and total ignorance:
ExxonMobil’s earnings are from operations in more than 100 countries around the world. The part of the business that refines and sells gasoline and diesel in the United States represents less than 3 percent – or 3 cents on the dollar – of our total earnings. For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.
We’ll ignore the fact that gas and diesel are only 3% of Exxon-Mobile’s business and focus on the issue of the profit that Alice thinks is too high.
we earned a little more than 2 cents per gallon
With gas prices hovering around $5.00 that breaks down to $0.4 cents of profit per dollar or 0.004% profit.
That is ridiculously small.
What Alice and people of her ilk do not understand is that it is not the cost of a gallon of gas that gives oil companies their large profits. It is that amount of product that is sold. To illustrate the point, if Exxon-Mobile were to eliminate all profit from the sale of gas, a gallon of gas that is now $5.00 would drop all the way down to $4.98. On a 20 gallon fill-up, that is a savings of 40 cents.
Wanna bet that Alice spends more than that on coffee each day?
Alice is one of those people who doesn’t understand the structure and functions of business. I have no idea what she does or does not do for a living, but I guarantee that she does not own a business of her own. I guarantee you that something as simple and basic as a profit and loss sheet has never passed through her fingers. Yet like many, she feels she has the right to tell a company what they should do. She feels that she has the right to file a baseless complaint against companies that are legally operating. In doing so, of course, she will cost the state more money but that is not her concern.
Alice closes her letter with this:
If you don’t care to take the time to complain, then you deserve what you get, in my not-so-humble opinion.
If you are stupid enough to expose your ignorance to the world, then you deserve what you get. And Alice’s ignorant opinions are deserving of the ridicule that should be heaped upon her.