New Jersey and Oregon are the only states in the nation that bar drivers from pumping their own gas. In New Jersey, it’s a local idiosyncracy that’s as ingrained in the state’s culture as Taylor ham (or pork roll… if you’re in South Jersey), salt water taffy, and arguing about the existence of Central Jersey. And in Oregon, it’s a reality as innate as the state’s mushroom fanatics, debating whether Voodoo Doughnut is massively overrated, and the Oregon/Oregon State football rivalry.

Full service gas stations were actually common throughout the United States until the 1970s, when soaring petroleum prices caused gas station owners to cut back on staff. But in New Jersey and Oregon, self-service gas stations are explicitly banned by legislation passed in 1949 and 1951, respectively. While the stated purpose of New Jersey’s law was to ensure the safety of drivers, its passage was actually the result of good old-fashioned political lobbying: full-service gas station owners were worried that they were losing customers to self-service stations, and pursued their representatives in Trenton to take action.

It’s a law that their descendants are beginning to regret. With the average statewide gas prices now over $4.75, gas station owners and some state legislators have called for a repeal of the self-service ban, arguing that it would help drive down prices and give gas stations more flexibility during worker shortages and pandemics.During the COVID-19 pandemic, Oregon allowed gas stations operating in counties of fewer than 40,000 people to go self-service. New Jersey is nearly 90,000 square miles smaller than Oregon, but as the most densely populated state in the union, has more than double the number of residents. Salem County, the smallest in New Jersey, has over 65,000 people. But State Senate President Nicholas Scutari has thus far prevented the bill from reaching committee, and public opinion polls show that 73 percent of New Jerseyans favor keeping the gas pump status quo. Even Governor Phil Murphy called pushing for self-service gas tantamount to “political suicide.” 

Labor, Automation, and Cost Reduction

But thanks to the national increase in inflation over the last year, momentum has built to liberate gasoline customers and give them at least the option to – for a reduced price per gallon – pump their own gas. But why?

Let’s start with why it affects gas prices. As any economist could predict, the additional labor per gallon of gas impacts the end product’s price. Among industrialized and post-industrial economies especially, labor is the most expensive component of economic output – and it composes roughly 60% of GDP in the United States. Having to pay employees to do something most people can easily do themselves costs a gas station more money and requires them to raise prices. Therefore, cutting that additional labor should save more money and allow the operating costs to shrink, lowering prices as they compete with other gas stations.

The evolution of grocery stores provides an analogue to this situation. In 1916, grocer Piggly Wiggly figured out that consumers could perform the free labor of picking out their own goods in person rather than waiting on a clerk running around collecting items they put on their list. Eventually this self-service grocer model led to the rise of cost-competitive outlets like Walmart. In the 21st century, it could be argued that cashiers were automated away to become self-serve checkouts, but while this is partially true, the labor was also passed through to the consumer to shave operating costs. It’s not so much an attribute of automation as it is cost reduction. A better way to put it is that thanks to automation, you as the grocery store patron are now doing the work of the former cashiers! There is nothing inherently wrong with this – the labor is minimal, many people prefer it, and it of course required less human interaction over the course of the COVID-19 pandemic. 

You may lament the loss of your friendly cashier or gas attendant but the ATM is more convenient and efficient than a bank teller and booking flights through an airline website is simpler and less expensive than a travel agent. Automated services are more productive than humans and maintaining them is cheaper than paying wages, which means that some jobs are sacrificed for the greater economic good. The “giant sucking sound” of jobs leaving the country predicted by Ross Perot in response to free trade agreements like NAFTA never panned out, but the loss of jobs to automation did. However, even though automation has dramatically accelerated over the course of the last half century and many jobs were lost, automation has ultimately led to the creation of far more new and higher quality jobs overall. Just ask your local bomb squad if they prefer the additional jobs in robot development and remote controlling or the job that was taken by the robot.

But the real benefit to automation has always been in cost reduction for both companies and consumers. It’s an economic loss not to automate – why spend so much overhead on unnecessary labor, especially as labor has become scarcer? In New Jersey and Oregon, it is simply unnecessary to pay full wages for someone to top up your gas tank when Americans in the other 48 states seem fully able to do so without blowing themselves up. Some New Jersey stations pay $17 per hour for gas attendants and remain unable to hire as many people as they need, pushing prices up further. So, accepting that this does necessarily push prices up, what would the real impact on consumers be if these two holdouts allowed them to pump their own gas?

More Work for Less Money (But in a Good Way)

In New Jersey, the estimated cost savings tend to hover around 15 cents per gallon, which is only around $2-$3 per fill up – but likely around $100 per year per regularly-driven vehicle. New Jersey’s gas prices are already higher than the country’s at large, averaging around $4.77 per gallon, and an estimate of average fuel economy and cost of gas in mid-2020 (when prices were about half this price) surmised New Jerseyan motorists could expect to spend around $800 on gas per year. If we double that to reflect this year’s prices, we’d expect New Jersey residents to spend closer to $1,600 per year on gasoline. Cost savings of $100 or more are hardly negligible as New Jersey residents have had to adjust their budgets to higher gas prices. Even if someone saves just $100, it means one more trip to the grocery store, one nice dinner out, or one more drive to visit a family member – just by eliminating a market inefficiency.

And yet, 73% of New Jerseyans don’t want to do it. Democratic Governor Phil Murphy called the service “part of our fabric” and described messing with full-service as the “political third rail in New Jersey.” But if inflation and gas prices continue to rise, legalizing self-service may be the least bad option at their disposal to provide New Jerseyans with some form of relief. When former Governor Chris Christie raised New Jersey’s gas tax in 2016, he did so while simultaneously lowering the state’s estate and sales taxes. Assuming that Murphy would want to maintain that balance, decreasing the gas tax while increasing other taxes has the potential to negate any political good generated by voters having to pay less at the pump. 

And in Oregon, where average gas prices are above $5.15 per gallon, consumers could expect even more savings, though their proposed legislative alternatives to the state’s current law are designed with the focus on increasing access to gas at earlier or later hours, as opposed to trying to reduce costs. Oregon doesn’t appear to be seriously considering eliminating the labor inefficiency as a means to reduce prices, though, as the data out of New Jersey – who has more seriously researched alternatives – demonstrates, they should. Polling in Oregon has been pretty evenly divided on the issue, though younger drivers favored ending the ban. 

When inflation ravaged the American economy in the 1970s, President Richard Nixon responded with a series of policy decisions so startling – ordering wage and price controls, adding surcharges to imports, and taking the U.S. off of the gold standard – that they were collectively known as the “Nixon shock.” While having to pump their own gas may scare the residents of New Jersey and Oregon at first, it’s probably the best, and least disruptive, thing their state governments could do to try and contain inflation. Surely the indignity of learning how to pump one’s own case is worth the savings it would provide.