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SALT LAKE CITY -- A law that helps protect small gas retailers from competitors pricing gas below cost was reviewed yesterday. As gas prices continue to fall, consumers are finding themselves paying higher prices at the pump because of it, the Desert Morning News reported.
The law, which was revisited yesterday, will be repealed next year if the Legislature does not reauthorize it. A 2005 report by the state's Office of Legislature Research found that there are 16 states that have a similar law prohibiting below-cost gasoline. One state, Georgia, has found the law unconstitutional, while Florida has not repealed the law, despite attempts by large gas retailers such as Wal-Mart.
The Motor Fuel Marketing Act was passed in 1981 to protect the small, independent gas retailers from going out of business from lower-priced chains in the area. The act, which prohibits retailers from selling their fuel below the actual cost, was approved because large chains were thought to lower prices below cost to drive out smaller competition that could not price gas as low. Once the small competition was gone, large chains would be able to price fuel at whatever level they chose.
Walker's, a marketer with 23 stations throughout the state, believes that the law is necessary. As a family-owned business for the past 53 years, the law "helps us because it creates a more level playing field," Mark Walker, vice president of the company, told the newspaper.
Coincidentally, Walker's is one retailer that has been fined under the law. At a grand opening in 2000, the company allegedly priced gasoline below cost at the station. "They attacked me for political reasons," Walker told the Desert Morning News.
But consumers in Utah believe that the law should be repealed as their price per gallon remains high -- $2.86 a gallon for regular versus $2.47 nationally -- according to national fuel prices by AAA.
In a Desert Morning News letter to the editor, David Bartosiewicz wrote "When oil has dropped seriously downward, you don't give a dang. You're greedy, and I'm ashamed to see Utah gas station owners taking advantage of loyal customers."
"We would rather have the marketers work through this," Lee Peacock, president of the Utah Petroleum Association told the newspaper. "Quite honestly, we have members that think that the law has been useful and some that don't. It's extremely difficult to enforce because the law does have some caveats on when you can sell below your cost to meet a competitor. It really comes down to a case of who lowered first and why did they do it."