29 June 2011

Gouging consumers on gas

So the gas pumps in the province are prone to error in favour of retailers, as CBC reports.

Well, sort of.

We don’t know how many gas pumps there are in the province but CBC reports that of the 962 examined over a two year period, nine percent didn’t pump accurately.

Of the nine percent, 56% erred in favour of the retailer.  Logically, the remaining  44% didn’t pump the right amount but the consumer benefited.

But do the math on that to understand if you had a “decent chance” of not getting the right gas amount as the CBC story asserts. 

Fifty-six percent of nine percent of 962 works out to be 48.

48 out of 962.

That works out to be 4.9%.

So at any time you are buying gas, about five percent of the pumps across the province could be reading incorrectly in favour of the retailer.

Four percent of the pumps will make mistakes in your favour.

Gasoline watchdog George Murphy thinks that federal government officials should inspect every gas pump in the province twice a year in order to stop this. Taxpayers would bear the full freight for that, most likely.

Seems like a bit of overkill given the number of errors is relative small.

If you want to stop gouging consumers, it would be far easier and far less costly to consumers if we simply got rid of  the gas price fixing scheme the provincial government runs.  People like George Murphy agitated for that in order to protect consumers.

As it turned out, the government price fixing scheme gouges the people pumping gas into their cars 100% of the time.  The only people who benefit from it are gasoline retailers and the provincial government and they benefit from the price fixing scheme 100% of the time.

Five percent chance you could lose some money versus 100% chance of getting hosed.

There’s gouging and then there’s gouging, obviously.

That’s math anyone can follow.

- srbp -

3 comments:

Mark said...

There's a longer, national CBC story that provides a bit more context. Both stories focus on the larger number - i.e. the percentage of errors that go a certain way- rather than the more important number - i.e. the percentage of pumps with errors. I guess "always stick the bigger number up front" is one of those things they teach at J school.

Anyway, if you're scandalized by inaccurate gas pumps or other measuring devices, (the nozzles on helium tanks, perhaps) the relevant Act and Regulations are under revision, and subject to some sort of public consultation, here.

Send your beef to:

MC Legislative Review
Standards Building
151 Tunney’s Pasture Driveway
Ottawa ON K1A 0C9
MC.LEGISLATION@ic.gc.ca

Darrin Marshall said...

http://www.ic.gc.ca/eic/site/mc-mc.nsf/eng/lm04283.html#Section11

I have very brief experience in natural gas and electric meter calibrations. I imagine when these regulations come into affect, there will be a representative from the retailer present, and someone who would represent consumer.

I notice he talked about number of errors, but not about the magnitude of the errors. In addition, don't all measuring devices have some error? I'm not completely up-to-date on petro measuring devices but surely there is some acceptable margin of error? No discussion about this in the article though. Unfortunately this is not uncommon.

In my opinion, the "CBC News investigation" was in fact a simple access to information and the article by the CBC News itself is written simply to stir the average idiot.

Edward Hollett said...

Thanks Mark and Darrin for the added info.

I suspect you are right, Darrin. This is likely a case of getting a sheaf of papers and writing a story based on it and not much else. Gas prices are a sensitive issue with consumers and any suggestion they are being had usually gets a strong reaction.