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MILWAUKEE -- State law requiring inflated gasoline prices is sparking heated debates in the Wisconsin state legislature over gasoline prices for different retailers.
The Unfair Sales Act, also known as the minimum-markup law, requires state gasoline dispensers to add an additional 9 percent per gallon to gas prices. The law states that companies with large market shares cannot sell their products for less than the amount paid to the distributor. The law, instituted during the Depression era, was intended to protect local "mom-and-pop" retailers from large-company monopolies.
Recently, however, the measure has become the topic of a heated debate. State Rep. Duwayne Johnsrud (R-Eastman) said the act should be strengthened because the law is adversely affecting gas stations near the border, according to The (Wis.) Badger Herald. Currently, he said, gas stations near the border are able to lower their prices to compete with stations in Iowa and Minnesota.
Under Johnsrud's guidelines, competition between stations would be limited to state borders.
"It is unfair competition to compete with Minnesota and Iowa for gasoline prices because their gas taxes are lower," Johnsrud said. "Large companies can afford to compete because they have a larger income base, and this competition hurts the Wisconsin economy and drives local mom-and-pop stations out of business."
Johnsrud said he fears repealing the law would completely foster a monopoly mentality, one that would allow major oil companies to have predatory pricing. "Major companies such as Kwik Trip and Murphy Oil will therefore be allowed to set their own prices, thereby raising prices," he said.
However, state Democrats see the act as an inhibitor to economic progress. Rep. Shirley Krug (D-Milwaukee) said the law as it currently stands is hurting Wisconsin consumers and the economy. Krug is pushing to repeal the act in its entirety.
She added that predatory pricing is not really a threat to local consumers because myriad other governmental regulations ensure fair treatment to smaller businesses.
"It is a myth that predatory pricing is a threat, and the Federal Trade Commission agrees," Krug said.
According to Krug, the 9-percent increase included in the clause is passed down to consumers, thereby unfairly charging them.
"The law forces Wisconsin consumers to spend an additional $50 million a year on gasoline products," Krug said. "There is a good effect for retail gas companies because of a higher profit, and a negative effect for consumers because they have to pay more."
In addition, Krug said larger companies competing with each other already charge lower prices through competition.