America runs on gas stations. The US has more gas stations than any other country in the world, around 196,000. These rest stops and corner pumps supply the country with the gas it needs for its commerce and road trips.
Not only do they fuel the wheels of the American economy, they have also been an icon in American culture. To the average person, the legal history of filling stations might seem boring, even pointless. But to the trained eye, the history of gas stations reveals a political economy shaped by public-private collusion, cronyism, and even violent attempts to eliminate competition.
Self-service laws, statutes that prevent customers from pumping their own gas, are almost obsolete in 2025. In fact, only one state, New Jersey, has this law on its books. For years, Oregon and New Jersey were the last remaining states to have self-service laws on the books, but the Oregon Legislature repealed them in 2023.
While it may seem strange to some readers, the concept of self-service was not always the historical norm. In 1905, the first gas station was opened in St. Louis, Missouri. Fifteen years later, the United States experienced a boom in gas station construction, with roughly 20,000 service stations operating by 1920. Full-service stations, where an employee of the gas station pumps gas for the customer, were originally the norm. The concept of self-service did not emerge until the 1930s, and because of bans, self-service stations did not become widespread until the 1960s. But why was that the case? Simply put: the history of self-service laws is a history of rent seeking.
In 1930, Indiana became the first state to ban self-service at fuel stations. This ban did not occur in a vacuum; it was a direct response to the political entrepreneurship of businessmen. Following the opening of two self-service stations in 1930, the Indiana Petroleum Association lobbied the state fire marshal to ban self-service. This was done as this new model at the pump threatened the profits of full-service stations.
This story repeats itself across the country. In NJ, for example, a self-service ban was passed in 1949. According to Paul Mulshine, local full-service station owners had entered into a price-fixing agreement with each other. Naturally, this gas cartel was formed as a way of protecting their profits and keeping out competition. But a man by the name of Irving Reingold opened a self-service station offering gas at a few cents lower than the price-fixed rate. This drew in major business for Reingold, but the cartel was not happy. They shot up Reingold’s gas station, but he simply installed bulletproof glass. With this attempt not working, the cartel turned to lobbying and the Retail Gasoline Dispensing Safety Act was passed. Not only does this story show the public choice history of self-service laws, but also how easily cartels collapse under price competition.
Despite their popularity with the public, self-service threatened the profits of incumbent gas stations. Full-service stations saw their customers buy gas at the cheaper, newly opened self-service stations. Naturally, these businesses did not want to face this new competition, and all across the country, the lobbying of state fire marshals took place to eliminate self-service gas stations. In 1948, nine states had banned self-service.
Economists Ronald Johnson and Charles Romeo note in their article on self-service bans that “in 1968, only 27 states allowed the self-service dispensing of gasoline, and some of those states required that attendants be standing by.” Things began to change, however, and self-service laws were repealed, bringing back freedom of choice at the pump. By 1977, every state except for New Jersey and Oregon had removed self-service bans.
While many claim self-service laws were passed because of benevolent politicians’ care for the public interest, history shows these efforts had far more to do with cronyism than public safety.
More than just a story in public choice, self-service bans also reiterate basic Econ101 principles.
Self-service bans make the market for gasoline less competitive. Firms must pay more for labor to comply with self-service laws. These higher costs act as a barrier to entry for new firms. These bans also have the distorting effect of making gas stations compete on narrower margins. Economist Vitor Melo notes that gas prices fall by 4.4 cents per gallon when self-service bans are repealed. While self-service bans may seem minuscule, they ultimately harm the common good by limiting competition, violating property rights, and making gas less affordable for consumers.
Self-service laws hold a more interesting history than initially perceived. This story of cronyism and rent seeking vs. entrepreneurship and innovation has played out millions of times across countries and years. Despite the claims by many that laws are passed in the name of the public interest, the history of self-service laws makes one take a step back to examine that claim. Just like other regulations, self-service laws were passed as a way of protecting business against competition.
To learn the full story, read my article published in the Independent Review on the topic.
