Self-Service Gasoline: Legalizing Freedom (New Jersey, Oregon hold out)

“For years, the lobby of small gas station owners worried they would be crushed by big oil companies, which then owned most stations, and could afford to install the modern pumps and canopies self-service demanded. ‘They would have been 10 or 15 cents a gallon less than mine, so they would have buried me,’ said Sal Risalvato, who opened a station in Paramus [New Jersey] in the late 1970s.”

– Kate Zernike , “Drop That Gas Nozzle: New Jersey Is Full-Service Island, and Likes It,” New York Times, May 23, 2015, A1.

Saturday’s New York Times front-page article, Drop That Gas Nozzle: New Jersey Is Full-Service Island, and Likes It, brought the peculiar politics of New Jersey’s ban on self-service gasoline/diesel to a national audience. Fines for self-pumping start at $50 and grow to $500 for repeat offenders.

If self-service stations existed, motorists would save an estimated three to seven cents per gallon, or around $0.50 per fill-up. New Jersey residents would save time by not waiting for an attendant. Of course, market demand might support full-service bays to satisfy those who do not want to leave their car and dirty their hands.

Ms. Zernike ‘s piece provided some history–and a political update–on the nation’s most entrenched ban (exceeding Oregon, which has moved to relax its law against self-service).

In the 1940s, drivers were voting with their wheels for self-service gas. The owner of a Gaseteria on Route 17 in Paramus, just south of here, prompted a price war when he opened 24 self-serve pumps offering gas for 18.9 cents a gallon, about three cents less than his competitors, who sought the ban. (When it drove him out of the business, he opened a go-go club in Hackensack, featuring male dancers for female audiences.)

For years, the lobby of small gas station owners worried they would be crushed by big oil companies, which then owned most stations, and could afford to install the modern pumps and canopies self-service demanded. “They would have been 10 or 15 cents a gallon less than mine, so they would have buried me,” said Sal Risalvato, who opened a station in Paramus in the late 1970s, and is now the executive director of the New Jersey Gasoline, C-Store, Automotive Association.

Now, most stations are owned by independent operators. And owners, he said, have to block off pumps because they cannot afford to hire enough attendants.

The good news is that reform is under debate and might actually take hold in New Jersey, as in Oregon. “Last week, prominent legislators in New Jersey filed legislation to do the same — arguing that it might even help the nagging matter of finding money to fix the state’s crumbling roads and bridges, and noting that the gas station owners who pushed for the ban in 1949 now want to reverse it,” reported Zernike. “They also appealed to those with short fuses, suggesting that New Jerseyans would not have to wait as long for gas if they could pump their own.”

Some History: ‘Safety’ Regulation vs. Self-Service (Indiana: 1930)

The battle over self-service as an entrepreneurial strategy and a consumer option began 85 years ago. It began in Indiana (1930), was rekindled in California several years later, and spread to many states after World War II. Indiana’s story is below [1]; California’s story is told tomorrow at MasterResource.

“Safety” regulation appeared in a different form beginning in 1930 in Indiana. The governmental action was prompted by the successful opening of two self‑service stations, with 18 more planned, by an aggressive state marketer.  This novel approach to gasoline dispensing was watched by the whole industry.

The Indiana Petroleum Associa­tion, whose members feared the combination of locational conven­ience and discount prices from cost economies, lobbied the state fire marshall who, in highly publicized testimony, warned of the hazards of self‑service.  Effective June 1, 1930, a statewide regulation allowed only station owners or regular employees to dispense gasoline.

The self-­service chain challenged the regulation in court and publicized the fact that safety equipment was kept on the premises, unlike in garages, barns, and yards where legal self‑service regularly was per­formed. The regulation would stand, however, and a revolutionary form of gasoline marketing with the potential to form a competi­tive fringe with tracksiders ‑ the two stations were averaging a car per minute and saved motorists 20 percent off the full service price ‑ was nipped in the bud.

It would not be until after World War II when self-­service marketing would make a comeback and neutralize “safety” regulation to gain a foot­hold.

Sources: Robert Bradley, Jr., Oil, Gas, and Government: The U.S. Experience (1996), pp. 1366–67; National Petroleum News, May 28, 1930, p. 39;  National Petroleum News, May 28, 1930, p. 39.