I have a lot of family that lives in New Jersey, and every time I go out to visit them I am always surprised to remember that I am not able to use a gas pump by myself. For those of you who have not had the pleasure of driving a car through New Jersey (or until quite recently Oregon), it is against the law to pump your own gas at any station within the state. Each gas station is staffed by attendants whose job is to do this for you.
The stated reason that New Jersey has a self-service ban is because of fire hazards, an idea that was lobbied by full-service gas station owners in the late 40’s. Today, the majority of New Jersey residents still oppose fully self-service gas stations. A Monmouth University poll found that 55% of residents say that New Jersey being the only state that does not allow self-service is a good thing for the state.
Another question asked by Monmouth University was whether or not New Jerseyans would prefer full self-service if it meant that gas was 15 cents less per gallon compared to full-service. To this, 70% of people said they’d prefer to pump their own gas at lower prices.
This is interesting because we might expect that full-service gas stations would charge slightly more for their gas than self-service. They have an extra employee to pay, after all.
According to AAA, New Jersey has the 29th cheapest gasoline prices in the country. How much more would drivers be saving if New Jersey did switch to self-service gas?
According to a new study by Vitor Melo from Clemson University, the answer is about 4.4 cents per gallon. This study used the 2018 partial repeal of Oregon’s self-service ban in order to better understand what the impact on prices was.
In 2018, Oregon passed a law that lifted the self-service ban in certain counties (with populations below approximately 40,000). This exogenous policy change within the state was perfect for a difference-in-differences analysis.
Gas prices can be a challenging thing to study because they are so unstable, so it is difficult to understand whether they are changing because of a policy or just because they are gas prices. After the partial repeal went into effect however, the change in prices for the affected counties was consistently less than the change in prices for the control counties.
The total savings over a year for a family with three licensed drivers would likely be about $90. In his conclusion, Melo speculates that this effect might be larger in urban areas where gas stations may have to pay attendants higher wages.
For policymakers, this is new evidence that helps them better understand the impacts of a self-service ban. While it does support the jobs of gas station attendants, those costs are passed on to all other drivers through the form of higher gas prices.
Is allowing self-service gas stations worth it for New Jersey? That’s for them to decide. What we do know is that if one day New Jersey lifts its ban, we should expect lower gas prices to follow.