MANITOWOC, Wis. -- Some small gas station owners in Wisconsin have formed their own organization and split with the Wisconsin Petroleum Marketers & Convenience Store Association on the issue of repealing or reforming a state law that requires gasoline retailers to markup every gallon of gas they sell by at least 6%.
The minimum markup law was passed in the 1930s to help small mom-and-pop' stations like ours compete against the big guys, said Richard McDonald, president of Lower Gas PricesNOW! Now it's costing consumers millions and the big guys are [image-nocss] laughing all the way to bank, he said.
According to McDonald, who owns Bubba's Place, a small station in the Manitowoc area, larger dealers and dealer chains are using the Depression-era legislation to drive small retailers out of business. For starters, the minimum markup tax' is driven by volume, he said. That means that in today's market, for every dime the minimum markup generates for little guys like me, it's putting a dollar in the pockets of the big guys. Today, it's a real money maker for them, and they'll do anything to protect it.
He also said the law discriminates against people who do not want to buy on credit or do not qualify for a credit card. Right now, two people pumping the same gas at the same station at the same time could wind up paying a different amount for the gas simply because one uses a credit card and one doesn't, he said. "The bottom line here is that if you want to protect small retailers, the current minimum markup isn't the way to do it.
McDonald said he and others decided to create the new retailer and small-business organization because he became convinced that there was no other way to protect small station owners and consumers. When gas reached $3 a gallon, I told the petroleum marketers association that I didn't think we could justify the sort of profit margin the minimum markup was generating and that we ought to support some sort of reform or repeal to give our customers a break, he said. Their response convinced me that the petroleum marketers association doesn't represent the mom-and-pop' stations and that they care more about profits for the big guys than they do about fairness for consumers or small retailers.
McDonald said that he and others from his organization will be talking with legislators about the need to change or repeal the minimum markup law, and that he will do everything he can to push for legislative action as soon as possible. When gas was selling for $3 a gallon, the minimum markup required me to tack an extra 18 cent tax' on every gallon I sold. That's at least 8 cents a gallon more than I needed to make a fair profit. It's just not right and we need to do something for our customers as fast as we can, McDonald said.
He said his new organization has already attracted other small stations like his. We've only been in business for four days and already my phone is ringing off the hook, he said. I'm overwhelmed by the positive response I'm getting from other small retailers.
According to the Herald Times Reporter, McDonald said he still is charging too much for gasoline; 10 weeks ago, when gasoline was more than $3 a gallon, he said, I feel like I'm gouging at 19 cents markup on a gallon.
McDonald advocated several changes, including removing the required markup by wholesalers. He said the rebates they get from oil companies ensure them a fair profit. He would eliminate the requirement that state, federal and inspection fee taxes be part of markup. The 6% markup by retailers would remain, said the report.
He said the law's provision allowing retailers to match their competitors' prices without restrictions should be modified to prohibit stations from selling fuel at or below their cost. He said mom-and-pop gas station ownersmany of whom don't have convenience centers to generate sales revenue and profitneed the 6% markup.
McDonald said mom-and-pops keep the high-volume sellers honest and states doing away with fair markup statutes have seen prices climb as competitors dwindle.
Two local assemblymen who would vote on any possible changes in the law are not so sure it should be changed, the report said. I look at what is best for the consumers, in the short and long term, State Representative Frank Lasee (R) told the newspaper. I hate to be wishy-washy, but there are no conclusive facts that support repeal or keeping the law.
State Rep. Bob Ziegelbauer (D) told the paper, The minimum markup law is more complicated than it seems. We need to be careful against making a knee-jerk decision on it. He favors forcing politicians to vote on state gasoline tax increases, eliminating automatic indexing where annual hikes go into effect without accountability by elected representatives.
That would clearly result in prices being lower than they otherwise would be, Ziegelbauer said.
At least one politician does favor change. State Senator Dave Zien (R) said he will introduce a bill this week to overhaul the law. It would eliminate the 3% markup for wholesalers and reduce the 6% retailer markup, according to the report.
Zien estimated his changes would lower per-gallon prices 4 to 6 cents. McDonald calls his proposal the Bubba 10-cent solution with similar savings.
Bob Bartlett, president of the Wisconsin Petroleum Marketers & Convenience Store Association, said he prefers to see the law remain as is.
Research shows that states with fair-marketing laws, like Wisconsin, have not only more robust pricing for consumers, but we have more firms in the marketplace, he told the paper.
Zien's proposal or changes similar to McDonald's would need approval from the legislature and Governor Jim Doyle to become law, said the report. In the past, Doyle has said he would support a repeal of the minimum markup law.
For more information or to join Lower Gas PricesNOW!, contact McDonald at (920) 374-0983.
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