Karl Grossman’s characterization of zone pricing as a “scam” in the petroleum industry is interesting [“Oil industry baloney,” Suffolk Closeup, November 19 ]. If it is a scam, it’s one that’s practiced by hotel chains, supermarkets, car rental companies, movie theaters, et al. So I guess those businesses will be targeted next.
Whether one agrees with Mr. Grossman’s characterization or not, one would have hoped that a journalism professor would have done his homework. If he had read the bill that was recently passed by the State Legislature, he would have realized that the law as currently written does not even apply to refiners.
Second, if Mr. Grossman doesn’t like the Quinnipiac University study that was done in Connecticut—the one that concluded that prices would actually rise in most parts of the state if zone pricing was banned and would harm disproportionately those living in the lower income areas of the state—because it was paid for by the industry (implying, I guess, that the industry paid off these economic professors at Quinnipiac), he might have consulted several other studies that reached the same conclusion: namely, studies conducted by the Federal Trade Commission in 1999, 2003, 2004 and 2007 (under both Democratic and Republican administrations). They indicated that “adverse effects would be felt by consumers if zone pricing was banned.”
As the Quinnipiac University study noted, “The idea seems simple and appealing. If zone pricing is banned, then possibly gasoline prices would be lower. Economic theory and numerous studies, however, suggest the opposite is true.”
Moreover, “Price differentiation is the norm in a healthy economy, not the exception.” Oh, and about the influence oil industry has over the legislature that Assemblyman Fred Thiele, who was quoted in the column, claims it has, we did a little homework. According to the Attorney General’s “Project Sunlight” data, the major oil companies—all combined—contributed less than $6,000 to the entire State Legislature, including campaign committees in 2007.
The New York State Petroleum Council, the trade association that represents these companies in New York State, has no political action committee and has never contributed to any candidate or committee. Based on this $6,000 figure, any reasonable person would have to challenge Assemblyman Theile’s assumptions about “the amount of leverage the oil industry had on political parties … [in manipulating the legislature with their] ‘behind the scenes’ … campaign contributions.”
As he well knows, campaign contributions to legislators total in the millions and are a matter of public record—nothing clandestine about it. A question to ask, of course, is if the idea was such a good one and has been around for 20 years or more, as Mr. Grossman notes, why has no other state adopted a similar measure? Well, maybe they read the studies and did their homework.
CATHY A. KENNYAssociate Director New York State Petroleum Council