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Monday, August 28, 2023

The Real Reason Millions of Americans Are Prohibited From Pumping Their Own Gas

The true purpose of laws that ban self-serve filling stations has nothing to do with safety or “the common good.”

Image Credit: iStock

For the first time since the Truman administration, Oregon drivers will be permitted to grab a fuel hose and fill their gas tanks all by themselves.

Governor Tina Kotek on Friday signed legislation, which went into effect immediately, that lifts the state’s 72-year ban on self-serve filling stations, leaving New Jersey as the last state in the US with a prohibition on self-serving gasoline stations.

Many Americans probably have no idea such bans still even existed, as ridiculous as they may be. Yet New Jersey Governor Phil Murphy says he has no intention of lifting the Garden State’s ban. 

“On self service gas — it’s been sort of a political third rail in New Jersey, which I have historically not crossed,” Murphy recently told a local news station. “I’m not necessarily signing up for that because I need to understand the impact.”

It’s unclear what Murphy means by “understand the impact”—more on that in a minute—but it’s important to scrutinize the stated purpose of such laws. 

New Jersey’s law, like Oregon’s, ostensibly stemmed from safety concerns. In 1949, the state passed the Retail Gasoline Dispensing Safety Act and Regulations, a law that was updated in 2016, which cited “fire hazards directly associated with dispensing fuel” as justification for its ban. 

If the idea that Americans and filling stations would be bursting into flames without state officials protecting us from pumping gas sounds silly to you, it should. In fact, safety was not the actual reason for New Jersey’s ban (any more than Oregon’s ban was, though the state cited “increased risk of crime and the increased risk of personal injury resulting from slipping on slick surfaces” as justification). 

To understand the actual reason states banned filling stations, look to the life of Irving Reingold (1921-2017), a maverick entrepreneur and workaholic who liked to fly his collection of vintage World War II planes in his spare time. Reingold created a gasoline crisis in the Garden State, in the words of New Jersey writer Paul Mulshine, “by doing something gas station owners hated: He lowered prices.”

In the late 1940s, gasoline was selling for about 22 cents a gallon in New Jersey. Reingold figured out a way to undercut the local gasoline station owners who had entered into a “gentlemen’s agreement” to maintain the current price. He’d allow customers to pump gas themselves.  

“Reingold decided to offer the consumer a choice by opening up a 24-pump gas station on Route 17 in Hackensack,” writes Mulshine. “He offered gas at 18.9 cents a gallon. The only requirement was that drivers pump it themselves. They didn’t mind. They lined up for blocks.”

Consumers loved this bit of creative destruction introduced by Reingold. His competition was less thrilled. They decided to stop him—by shooting up his gas station. Reingold responded by installing bulletproof glass.

“So the retailers looked for a softer target—the Statehouse,” Mulshine writes. “The Gasoline Retailers Association prevailed upon its pals in the Legislature to push through a bill banning self-serve gas. The pretext was safety…”

The true purpose of New Jersey’s law had nothing to do with safety or “the common good.” It was old-fashioned cronyism, protectionism via the age-old bootleggers and Baptists grift

Politicians helped the Gasoline Retailers Association drive Reingold out of business. He and consumers are the losers of the story, yet it remains a wonderful case study in public choice theory economics.

The economist James M. Buchanan received a Nobel Prize for his pioneering work that demonstrated a simple idea: Public officials tend to arrive at decisions based on self-interest and incentives, just like everyone else. 

There’s a common assumption that politicians and bureaucrats make decisions differently than the rest of us, that they’re working for “the common good.” But Buchanan understood—and persuasively showed—that humans don’t become altruistic angels simply because they’ve accepted a government job. They continue to serve their private interests in public office, which should not surprise us since all action is individual action

And if all action is individual, all interests are ultimately private, Milton Friedman explained

“. . . every individual serves his own private interest. . . .” wrote the Nobel laureate. “The great Saints of history have served their ‘private interest’ just as the most money-grubbing miser has served his interest. The private interest is whatever it is that drives an individual.”

Of course, those in government are loath to admit that anything as crass as “private interests” could motivate their thinking. Indeed, their power (and political future) rests on the idea that they are serving interests far greater than themselves. 

Yet much of the machinery of modern government rests on the assumption that politicians and bureaucrats do serve the common good.  

Politicians in New Jersey couldn’t very well admit they were serving their own interests when they decided to play ball with the Gasoline Retailers Association and drive Reingold out of business. They had to convince people they were protecting people from the chaos that would ensue if consumers were allowed to pump their own gasoline at a lower price.   

The claim that pumping fuel is some kind of safety hazard is of course even sillier today than it was in 1949, which is why New Jersey Gov. Phil Murphy had to be so vague—”I need to understand the impact”—when asked if he’d support legislation that would allow Garden State citizens to pump their own gas.

The important thing to understand is that the paradigm at work here is not the exception, but the rule: People in government will serve their own interests. Indeed, the simple idea that humans are not angels and their power over the people needed to be restrained was of course not lost on America’s founding fathers.

“If men were angels, no government would be necessary,” James Madison wrote in Federalist 51. “If angels were to govern men, neither external nor internal controls on government would be necessary.”

This is precisely why government needs a limiting principle, one that restricts its use to the protection of life, liberty, and property. 

“Once the principle is admitted that it is the duty of the government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments,” wrote the economist Ludwig von Mises.

Absent such a limiting principle, we end up with lawmakers—all of whom are far from angels—banning people from pumping gas in the name of public safety…and much worse. 

It’s a sad state of affairs that in the Land of the Free, Americans are still fighting for the freedom to pump gas.

This article originally appeared on AIER


  • Jonathan Miltimore is the Senior Creative Strategist of FEE.org at the Foundation for Economic Education.