This story both cheers and enrages me. Cheers, because I love the concept of a city (or other governmental agency) providing basic, needed goods or services to the citizenry on a non-profit basis. Enrages, because of all the business lobbyists who are coming out of the woodwork to bleat about “socialism” while trying to use their power to get the state legislature to protect their profit margins by outlawing this. FFS.
If the average Kentucky gas station owner is earning ~6 cents per gallon of gas, how is the City of Somerset subsidizing its 20 cent cut?
This article is interesting, too. Apparently, 2 years ago the profit margin on gas was less than 1% per gallon.
I guess I’m in the camp of the bleaters. Why subsidize Joe-Bob’s non-fuel-efficient fleet at the expense of the guy running the Marathon on the corner? He is not likely to be rolling in dough either.
Having city-run gas stations does not reduce the total amount of employment required.
But sure: if you don’t think it makes sense, then I would expect you to vote for candidates in your city that are opposed to taking this kind of action. But to lobby the state legislature to make it illegal for the locally democratically elected officials of this town to do this…how can you justify that?
You can bet that taxpayers will be subsidizing the cost of the gasoline.
Which might be a worthwhile expenditure in this instance.
The article keeps saying 20¢ less than the “statewide average” which is misleading.
According to Gas Buddy, the price of gas at the “Fuel Center” – which I think is the right place judging from the name given in the NPR article – is currently $3.25 which is actually a penny or two higher than many other Somerset, KY gas stations.
Which, if accurate, sort of makes you wonder what the point is of a municipal gas station.
[Edit: Unless the price of gas across the town dropped due to competition from the municipal station, still it’d be helpful to know what the area’s average was before rather than a statewide average]
It would make more sense to remove the pumps and stop selling the loss leader, and have the city selling Slurpees and one-ounce bags of Doritos and sticks of beef jerky for less than two bucks and raking in the commissions on lottery tickets.
If they were really undercutting the private sector, they’d be torched within a month.
I agree that this would be helpful; but it was strongly implied in the story that the municipal gas station caused the others to lower their prices.
Cities sell water to their citizens, as well as electricity in some cases (Los Angeles comes to mind). Hard for me to see how this is categorically different to the extent that it should be ruled illegal if the local government has the support of a majority of citizens in doing so.
Not only is this a step in the right direction, I hope it eventually becomes the nationwide standard.
Then we’ll see massive shortages; stations in the wrong places over time; huge deficits growing from the operations of what stations that will exist. Imagine the amount of losses such an enterprise that the taxpayers would have to subsidize. The USPS currently in on pace to lose $12 billion this year, and that’s from delivering packages. The market for automotive fuels in the US is about a $135 billion market compared to the $24 billion revenues of the USPS…so a simple extrapolation of how well they work, one could assume the government would probably lose about $65-70 billion a year operating the nations automotive fuel business.
From delivering packages, and from subsidizing UPS and FedEx, and from subsidizing the Department of War, and from putting up with all sorts of other nonsense that their enemies impose on them.
That said, though, there are some industries, like insurance, where it’s natural for the government to get involved: The insurance industry has huge margins and significant economies of scale, both of which make government-run insurance much cheaper than private. But I’m having a hard time seeing how it makes sense to have a government-run gas station.
Omar, I think you hit all the usual antigovernment talking points, well done. Never mind that governments seem to manage to know where to put sewers and street signs and storm grates. They have many traffic engineers working for them figuring out where to put stoplights and on and on, but you think they would have no clue where to put gas stations? Okay then.
I agree with Chronos though insofar as it is especially absurd to have a private insurance industry.
In Mexico, gas has been sold only by the government forever, at the same price everywhere in Mexico. It is so cheap, they have to artificially raise the price near the US border to keep American drivers from coming over and buying up all the cheap Mexican gas. Few drivers in Mexico have ever complained about the availability and service at Pemex stations.
Actually the current price per gallon of unleaded as sold by Pemex is about a nickel per gallon higher than the average price per gallon in the US
This is a really great link and shows how terrible the article in the OP is. Looking at the Gas Buddy link shows (1) the government run gas station isn’t the cheapest and (2) there’s 20 or so gas stations in downtown Somerset. Essentially the entire article is bullshit bordering on flat out being fraudulent. Somerset clearly has competition in the gasoline market, and there’s no evidence presented that opening this government gas station has done anything to affect gas prices.
In fact, the numbers show that it almost certainly has no effect. The Marathon station isn’t selling their gas at 3.21 because there is a government station selling it at 3.27. They are selling it at 3.21 because there are twp Speedways that sell it at 3.22, two Krogers that sell it at 3.22, a Murphy that sells it at 3.22, an Edward’s Foodmart that sells it at 3.22, half a dozen Shells that sell it at 3.23, among many others that sell it cheaper than the government station. In fact, I count 25 places you can buy cheaper gas in Somerset than the government place, according to the Gas Buddy link.
We are bedeviled by high gasoline prices in our area but not so much any more, not after Costco put in a gas bar and substantially undercut surrounding gas stations. Funny how they managed to lower their prices to compete.
I do believe governments should provide essential services to everyone at reasonable cost, services like Healthcare, Fire Departments, Schools, Police services, etc. but not gas stations! 
Move to Pennsylvania, where you can only buy wine* or spirits from state government run Wine & Spirits *Shoppes *staffed by unionized civil servants. :rolleyes:
*Or directly from the winery; as long as it’s in state.
Lacking further elaboration, your statement above would seem to corroborate jtur88’s claim.
And, by the way, I believe the US Postal Service was privatized during Reagan’s first term. The inefficiencies it suffers seem (to me, at least) to be due to the government’s inability to completely let go and allow them to charge real-world prices (like FedEx, DHL, UPS, et al) or stop Saturday deliveries, or close branches or take all sorts of measures that a truly private business would be free to do. I’m not necessarily blaming Reagan* (or his administration or the legislators during those years) because I don’t know exactly when the Post Office started to suffer financially. Nevertheless, I do think that the half-privatization of opening the doors to competing delivery services while simultaneously impeding them from making their own business decisions gives them no direction to go but down the drain.
As for insurance, one of the best-known and highly profitable companies in the USA started out as a Government Employees Insurance COmpany. They’ve done well before and after privatization. Perhaps the city-run fuel supplier can do so as well.
I think a city- or county-run ISP would be great. TW sucks around here and my brother isn’t happy with his Comcast, either.
–G!
*I blame him and his gang for enough already.
How does higher gasoline prices in Mexico than US corroborate jtur88’s statement that gas is so cheap in Mexico they have to keep the American’s out statement. 
Don’t always trust your own beliefs…(see above). The USPS is an establishment of the executive branch of the US government, with its board primarily appointed by the POTUS. It also has sovereign immunity and imminent domain powers. Hardly a private enterprise.
Something that both sides seem to be missing here is that the mayor of the town didn’t set up the gas station out of some kind of progressive mindset that it was a basic need that should be provided at cost, or anything like that.
He pointed out that prices were higher due to a lack of competition (although it sure looks like there are a lot of gas stations in Somerset), and that if the city set up a gas station with a more realistic price, it would cause the price to drop across the board.
The part that bothers me is that I don’t get the impression that this mayor really did a lot of economic or market research to determine if there was indeed some sort of market distortion going on before he decided to unilaterally interfere with it. From the tone of the article it sounds like he just decided that gas prices were too high in his town and that he was going to do something about it, without really looking into it.
For all we know, there may be a perfectly valid reason that gas was higher in Somerset- less volume, harder to transport, less non-gas stuff sold by the gas stations, etc…
Beyond that, it’s wrong of that guy to just unilaterally decide that gas station owners are making too much money and change that. There wasn’t any proof shown in the article that gas prices were significantly higher in Somerset, or that it was an undue burden, or some sort of cartel type activity.
Nope, this good old boy just decided that he wanted cheaper gas, and decided to use public money to fuck with the economic system.