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Legislative Memo

BILL:

S.287 (Alesi) / A.2245 (Klein)

Support

SUBJECT:

Zone Pricing of Gasoline

 

DATE:

May 10, 2001

 

The Business Council of New York State, whose membership includes nearly 4,000 member firms as well as over one hundred chambers of commerce and professional trade associations, has reviewed the above mentioned legislation and opposes its enactment. The bill would amend the general business law by prohibiting the establishment of zone pricing of gasoline and attaching a five thousand dollar per day civil penalty for violations.

The bill assumes that prices set according to zones are arbitrarily based on what companies assume consumers are likely to pay. In essence, the bill's intent is to subvert market pricing that allows the flexibility to compete.

Zone or market based pricing is based on the reality that competition is locally driven. It varies from market to market and fluctuates over periods of time. Zone pricing allows local sellers to compete based on the conditions within their local markets. These marketers are driven by the competition they face and the reactions of consumers. It is this market based pricing that allows the gasoline industry to compete.

It should be noted that there are a number of businesses that use such methods to establish pricing and it is not unique to the petroleum and gasoline industry. Many businesses sell products at different prices in different markets depending on local competitive conditions. The regulation of one segment of the free market would be an over-arching interference by the Legislature. The intrusiveness of eliminating zone pricing on one market could lead to the creation of additional government restrictions on pricing for other industries. There are currently no other legislative restrictions on zone pricing regulations, for any industry, or any product, anywhere in the country.

For the above mentioned reasons The Business Council of New York State, Inc. opposes the above referenced legislation.