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Our opinion: Let competition set gas prices

It’s hard to believe there will be many state lawmakers who will oppose a proposal by Rep. Melissa Shusterman, D-Paoli, to prevent gas station operators from using artificial intelligence to help set gas prices.

Shusterman is drafting the legislation in response to a federal lawsuit filed by California residents alleging gas station companies including BP, Marathon Petroleum, 7-Eleven, Circle K, Walmart, and Albertsons.of violating California’s antitrust law through Kalibrate, a fuel-pricing software system used across the world. The plaintiffs allege Kalibrate’s AI software pools confidential competitor data to automate pricing and enable stations to avoid undercutting each other. The suit specifically highlights a “restoration” tool that purportedly allows stations in an area to contemporaneously implement large price hikes. According to the Associated Press, the plaintiffs describe Kalibrate as the “central nervous system for a conspiracy to extinguish retail price competition among gas stations.”

There are already complaints locally about high gas prices, especially given the presence of United Refining in our own backyard. But we have also seen gas stations located away from population centers offering gas at lower prices in an attempt to bring drivers away from population centers into their more remote stations. That’s the way competition is supposed to work in a free market economy. What’s alleged to have happened in California – and the plaintiffs in the case have a long way to go in court to prove their allegations – shouldn’t happen. That’s especially true in California, which boasts the nation’s highest gas prices as well as Assembly Bill 325, which explicitly prohibits the use of shared pricing algorithms to restrain trade.

According to the lawsuit, research into algorithmic fuel-pricing software found average price increases of about 6 cents per gallon, rising to as much as 30 cents per gallon in markets where many stations use the technology, the AP reported. The lawsuit states a 1 cent increase in gas prices costs California drivers a collective $134 million over the course of a year.

Shusterman’s bill is similar in its method, but limited to gas prices. The legislation could be a relatively easy first step toward protecting Pennsylvania drivers. Of course the second step is harder – finding a group with the will and the resources to use such a law in court.

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