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MADD Mixture: Beer, Gasoline and Money

 
     

    Economics is not only about numbers. Though economists love to spout statistics (more often than not in an attempt to impress the innumerate), economics is about supply and demand, but more often it's about costs and incentives and choice.

    Those concepts may explain why Mothers Against Drunk Driving has not lined up in support of legislation introduced by New York State Sen. Eric Adams and Assembly Member Michael Benjamin that would prohibit the sale of beer at gasoline stations.

    Indeed, according to Adams, the legislation had received “pushback” from MADD.

    The logic concept behind the Adams Benjamin bill seems simple: If we are told alcohol and gasoline don’t mix, why don’t we prohibit the sale of beer at gas stations? By not banning beer at gas stations, we’re allowing the means for getting drunk to be sold at the same location as the means for driving. The answer, in the case of MADD, may be just as simple: one of MADD’s “silver” corporate sponsors is BP Arco which operates 900 convenience stores – selling beer – around the country. “Silver” tier sponsorships are the third-highest level of support for MADD, which boasts seven “platinum,” no “gold” and five “silver” sponsors.

    Beer sales are big business for convenience stores, which are small stores or shops often located alongside busy roads, or at gas stations. They provide a major source of revenue for gas stations – and oil companies such as BP Arco. According to Convenience Store News which tracks the industry, beer sales represented almost about $13.4 billion in sales for convenience stores in 2007, almost 11% of total revenues.

    MADD Chief Executive Officer Chuck Hurley dismissed the suggestion that BP Arco’s support has anything to do with its position in “pushing back” against the Adams-Benjamin proposal. Instead, he said, MADD has prioritized legislation requiring the use of an ignition interlock in vehicles registered to convicted drunk drivers. The ignition interlock is kind of a breathalyzer. A driver has to breathe into it before starting the car. If the device detects alcohol above a set level, the car won’t start. Never mind the convicted drunk driver can get behind the wheel of a car registered to someone else.

    BP Arco supports MADD to the tune of $40,000 per year, according to Hurley. (Total contributions, excluding government grants, to MADD were $31 million in 2006.)

    One of the other MADD's Bronze sponsors is Innocorp Ltd. which just happens to manufacture Intoxiclock, another device designed to determine if an individual is legally drunk.

    The bill mired in the  New York State Senate Commerce, Economic Development and Small Business Committee isn’t a certain cure for drunken driving. Indeed, it could illustrate another economic reality: the law of unintended consequences by increasing the already inflated price of gasoline as gas station owners and operators try to make up the revenues lost from beer sales. Convenience store sales though already struggle when gasoline prices are high; who can afford even an overpriced soda after shelling out $4-plus a gallon for gas? But here is where incentives and costs kick in: Would we all bear the additional cost of gasoline as an incentive to reduce the ability of someone to drive drunk.

    There are those who would argue beer drinkers can just as easily drive to a grocery store or local deli to pick up their brew, but selling both gas and beer at the same location seems to make it too easy. 

    So, what are the economic dynamics?

    According to Kathryn Odessa, executive director of the Long Island Gasoline Retailers Association, convenience stores provide a significant portion of gasoline station revenues and any measure that cuts into that income would mean higher gasoline prices. After making the argument, though, Odessa couldn’t provide any detail.

    “Alcohol-selling gas stations make the dangerous mixture of drinking and driving far too convenient,” Adams, a former New York City cop said. "Alcoholic beverages are strategically placed for the motorist who has just purchased fuel, and sales promotions are common.”

    Indeed, MADD does not oppose Adams’ bill, but is not supporting it arguing it “does not oppose the responsible sale of alcohol to those 21 and older.” But a spokesperson demurred when asked to define “responsible.” Instead, Hurley reiterated his pitch for legislation to require “ignition interlocks.”

    But Adams offered a further complication in the sale of beer at gas stations, which seemed to go to the core of MADD’s requirement for “responsible” sales

    “Convenience store and gas station attendants are often not trained or experienced enough to detect that a patron who has just purchased fuel, and wants to purchase beer, may be intoxicated,” Adams said. “By prohibiting the issuance of a license to sell liquor to any establishment that sells motor fuel, a significant link between the purchase of alcoholic beverages and getting behind the wheel will be severed.”

    When interests collide, money wins.

     

    Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.