Poltroons who picked your pocket on April Fools Day


Expanded from the 4-4-99 Sunday Daily Sparks, Nev. Tribune

April Fools Day kept its promise last week. You and I were played for suckers from the first tick of the clock.

Promptly at midnight, new taxes went into effect designed to make you and me a little poorer while helping out those penniless downtown Reno casinos and Union Pacific Railroad. Special thanks is due to Gov. Kenny "No Tax Increases" Guinn for signing the law just in time.

Not to be outdone, Washington allowed cable television to become totally deregulated on April 1, and that's not all.

GAS PRICES BLOW UP. Regular Barbwire readers have long been forewarned that any disaster, large or small, real or imagined, will be used to jack up retail gasoline prices. First came the Bay Area TOSCO refinery fire, followed by another blaze at a Chevron facility. Retail prices skyrocketed by a third in just a few days.

My Tribune series from late April through September of 1996 showed in great detail how the game is played. You will find a summary in the May 25, 1997, Barbwire .

The grand strategy is to drive independent retailers out of business. Over the past 20 years, the number of gas stations has dropped drastically. Many formerly independent dealers have been forced to become major brand outlets in order to survive.

In the early 1980's, ARCO came up with an ingenious redlining scheme which has withstood most legal challenges and driven thousands of independent retailers out of business. Because of it, major oil companies need not conspire to fix prices. They can just look down the block at ARCO signs.

John Arfuso, a Las Vegas retailer for Texaco and Exxon, told a Nevada legislative committee in 1995 that "there is a direct correlation between our suppliers' pricing strategy and ARCO's reported price. We constantly follow ARCO."

ARCO prices gas to retailers according to the physical locations of stations within a gerrymandered pricing zone. The arbitrary boundaries make no sense unless analyzed as part of a strategy to force independent retailers to either go major brand or go under.

This explains how ARCO stations within a few blocks of each other might offer substantially different prices. Their goal is not to compete with other major brand dealers, but to squeeze the nearby independent. Other major brands seem perfectly content to follow ARCO's lead, knowing that in the long run, eliminating independent dealers means cartel pricing.

Bizarrely, ARCO lawyers have convinced courts that they have a legitimate competitive purpose for inexplicable price differences: The ARCO outlet selling for much more six blocks away is simply part of another marketing zone.

ARCO posts a price usually lower than other major brands which then follow ARCO's price downward but do not match it. The independent dealer inside that target zone soon finds his major-brand competitors selling for less than his wholesale price.

He must either sell his gas at a loss or lose customers to ARCO and its buddies. Sooner or later, that dealer becomes a major brand affiliate or goes under.

Big Oil uses every news opportunity to raise prices which they ratchet down very slowly after maximum profit has been gouged. The poor unaffiliated dealer gets squeezed at both ends of the vicious cycle. Prices rise quickly and fall very slowly, led, of course, by ARCO. A few independents die a slow death every time it happens.

U.S. west coast prices have often risen on news of shortages in other regions which don't affect this area's supply at all. West coast prices are currently much greater than elsewhere and Nevada's are among the highest anywhere.

West coast prices reflect that the ARCO prize zone scheme is much better refined here and has not yet been fully implemented in other parts of the country. Add Nevada's chronically high gas taxes and you can begin to understand why our prices currently contend for highest in the nation.

Some major-brand dealers told the legislature that they have been forced by their corporate suppliers to sell below cost for a period of time in order to crush a nearby independent.

In November of 1997, the U.S. Supreme Court ruled that wholesalers who dictate prices to their retailers may do so legally despite anti-trust laws.

Within a few years, all gas will come from a handful of major brands, all selling at inflated prices. The technical term is oligopoly, meaning market control due to few sources of supply.

Gasoline is a necessity and such manipulation affects every resident of the country. For reasons unknown to me, very few newspapers bother to print this story.

So I keep repeating it every time consumers scream in hopes that someone will finally listen.

CABLE TV JACKED UP. Showing its usual sense of timing, TCI Cable announced a $1.50 per subscriber rate increase a few days ahead of April Fools Day deregulation. Thanks to that bi-partisan disaster called the Communications Act of 1996, cable companies now enjoy unregulated monopolies and may fix prices at will.

The only good news for cable customers this month is decidedly mixed. On April 11, Michael Moore returns to TV with his new series "The Awful Truth." ( Alas, it's available only on the Bravo Network, for which you must locally subscribe to TCI's premium digital cable service.

UTILITY BILLS IN JEOPARDY. Sen. Randolph Townsend, R-Reno, has apparently forgotten the first rule of utility regulation we both learned from noted economist Dr. David Schwartz almost 20 years ago. Effective consumer representation involves both an independent consumer advocate ( and an effective public utility commission staff ( Townsend now proposes to combine the commission staff with the advocate's office, leaving regulators no personnel to evaluate conflicting points of view.

PROPERTY TAX WON'T GET WHACKED. Tax reformers accuse Assembly Taxation Committee Chair David Goldwater , D-Las Vegas, of refusing to schedule a hearing for Assembly Joint Resolution 17. The proposal from Assemblyman Don Gustavson , R-Reno/Sparks North Valleys, would allow Nevadans to vote for a latter day version of California's Proposition 13. I suggest calling Goldwater at (775) 687-4848 or (800) 978-2878. You may fax him at (775) 684-8888. (Note: Mr. Goldwater subsequently scheduled a hearing and has promised another.)

HEALTH INSURANCE PROPAGANDA. Who's behind all those alarmist TV spots asking you to call Rep. Jim Gibbons, R-Nev., and tell him to vote against his own health care reform bill? It's not the poor small business people and soccer moms on the commercials. The big money comes from major corporations who don't want HMOs made more responsive to patient rights.

Be well. Raise hell.


Andrew Barbano

Andrew Barbano is a member of CWA Local 9413. He is a 30-year Nevadan, editor of U-News and head of Casinos Out of Politics (COP). In 1998 he served as gubernatorial campaign manager for State Senator Joe Neal, D-North Las Vegas.
Since 1988 Barbwire by Barbano has originated in the Daily Sparks, Nev., Tribune, where an earlier version of this column appeared on 4/4/99.

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