State law 'protects' us from lower gas prices

Many Republicans and at least some Democrats in the legislature are on board. Gov. Jim Doyle has been for repeal for about 30 years, since he was a district attorney.

Can't we just repeal the minimum markup law, which just adds insult to injury and costs Wisconsin drivers more at the gas pump?

There will never be a better opportunity. (Although it did get as far as Gov. Scott McCallum's desk as part of the state budget, but he caved and vetoed it.)

The law was well-intentioned when it was passed in the 1930s. The idea was to keep the big oil companies from cutting prices to drive small, independent stations out of business, then jack prices back up later when they had killed off the competition.

It was supposed to protect consumers. But these days, it protects consumers from lower prices.

As gasoline prices climb, the mandatory markup -- 6 percent over the wholesale price or 9.18 percent over the terminal price -- also increases, adding even more to the cost.

So if the cost to wholesalers goes up 30 cents a gallon, the cost to consumers will go up 33 cents (they always round up,you may have noticed.) The gas stations haven't done any more work to earn the additional money. They're just along for the ride. The higher gas prices go, the more money they are guaranteed to make.

One gas station owner in Manitowoc says he's making 19 cents a gallon and feels like he's gouging people but the law won't let him stop. Story.

Even a two cents per gallon drop in gasoline prices would save Wisconsin drivers something on the order of $50-million a year.

The petroleum industry and gas station owners disagree, of course. They claim the current law saves drivers money. That seems like a hard sell anytime, and especially right now. If drivers save $50-million a year, where's it coming from? You got it -- the extra markup the wholesalers and gas stations take.

Some Democrats and the Capital Times have bought the argument that this law somehow keeps the big bad monopolies from swallowing up the little independents and mom and pop stations. They want to be for the little guy. That's commendable; so do I. But the little guy is the one filling up his tank. Small, independent stations are gone, despite the law. And there are enough other laws on the books to prevent predatory pricing, which is still against the law.

The minimum markup law should go now -- the sooner the better. The bill is scheduled for a committee vote on Sept. 13 and should get on the fast track for approval.

We'll get along just fine without a law that makes sure gas prices aren't too low.

Doyle explains the problem:

"I remember when I was district attorney in Dane County and I was called upon by the state Department of Agriculture, Trade and Consumer Protection to prosecute people," Doyle said. "In those days, the minimum markup extended to almost all products and they did all this work. Then they wanted me to prosecute these people for charging too little for a good. And I said, ‘Do you really want me to go in front of 12 jurors and try to convict somebody for charging them less?’"