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Gassed up about free enterprise
It’s amazing what a little competition can do.
Just three weeks after Costco opened its gas bar with prices lower than the rest and Prince George goes from having some of the highest gas prices in British Columbia to some of the lowest.
Prices have tumbled about 20 cents/litre since the scallywag upstarts actually did some free enterprising in the land that boasts it’s the home of free enterprise.
Gas prices are one of those items that everyone shakes their heads at. They go up and down in lockstep with each other and companies swear it is simply a function of the market. However, all it takes is one company, in this case Costco, to buck the trend and offer lower prices and they come tumbling down all over town.
That, is free enterprise.
While we all like to talk about free enterprise (we have a free enterprise coalition government in Victoria), real free enterprise rarely exists anymore.
The market is driven by oligarchies.
This is a situation whereby a small group of companies dominate the entire marketplace. In this case, oil companies, but it occurs in many, many sectors.
These companies, sometimes by design, sometimes simply by individual reasoning, come to the realization that they can all do better financially by simply getting along. In other words, the cutthroat race to the bottom, price-wise, in a true free enterprise model, can be tough on companies’ bottom lines.
Oligarchies have come to the realization that actual competition is bad for business. It’s definitely good for the consumer, but it’s bad for business.
Then we throw marketing into the mix and everything gets skewed even more. For Mad Men fans, that golden era of advertising was when large companies realized that, through marketing, they could tip the scales even more in their favour.
Pure capitalism relies on the tenets of supply and demand.
Fifty years ago the Madison Avenue folks figured out that with the right advertising campaign they could create demand. The old tenets of supply and demand relied on what society needed for the demand side of the equation. Now demand is linked to what we think we need. Pepsi and Coke were the early masters of this.
Fifty years on, it’s still going strong. Just look at the Apple ads. You’re not cool if you don’t have an iPhone … but do you really need an iPhone?
Oil companies are on the other side of the supply and demand equation. There will always be demand for gas to put in our cars and the oligarchic oil companies control the supply. The result: Free enterprise and capitalism doesn’t exist when it comes to gas prices.
The powers-that-be like to spout off about free enterprise and capitalism but the reality it exists less and less.
That’s why it’s so refreshing when a company like Costco decides to practice a little free enterprise because free enterprise is the best economic system for consumers.