Minnesota accuses SIST gas stations of undercharging

Associated Press/June 29, 2005

ST. Paul, Minn. – Gas prices are solidly over $2 a gallon, but the state of Minnesota says one chain of gas stations isn’t charging enough.

The state Commerce Department is accusing Shawano-based Midwest Oil of Minnesota of more than 160 violations of a state law that requires stations to charge at least 8 cents more per gallon than they pay. Midwest Oil faces a potential fine of up to $1.6 million.

In Wisconsin, the state Department of Agriculture, Trade and Consumer Protection is investigating a complaint from another gas station owner accusing Midwest Oil of Shawano of undercharging at its Mobil station, one of several the company owns there, consumer protection spokesman Glen Lloyd said Tuesday. The complaint was received June 24.

Midwest Oil of Shawano and Midwest Oil of Minnesota are subsidiaries of the R.C. Samanta Roy Institute of Science and Technology of Shawano.

Wisconsin law requires stations to charge either 6 cents more per gallon than they pay or 9.18 percent higher than the average posted wholesale price in their area, whichever is higher.

The company was previously found to be in violation of that law one day last year and was issued a warning letter, Lloyd said. Following that, other stations sued Midwest Oil, he said.

A Shawano County judge in December awarded $12,000 along with legal fees to a group of Shawano area gas station owners who had protested prices at the Mobil station. The judge also suggested Midwest Oil’s efforts to be a low price leader at that Mobil station made it prone to possible pricing violations. Midwest Oil has appealed that ruling.

In Minnesota, the Commerce Department alleges its investigators repeatedly bought gasoline below minimum prices at all three stations it owns – in Oakdale, Anoka and Albert Lea – and that Midwest Oil failed to fully comply with subpoenas requesting documents.

Company attorney Rebekah Brown did not return a phone message on Tuesday, and a message The Associated Press left for company CEO Naomi Isaacson at the Shawano Mobil also was not returned.

Laws in both states bar retailers from selling gasoline below cost. For instance, Minnesota Commerce said the minimum price on March 25 was $2.05 per gallon, but Commerce said it paid $1.96 at Midwest Oil’s Anoka station. Two days later, with the minimum still at $2.05 a gallon, Commerce said it paid $1.98.

The department also alleged that Midwest Oil charged less at the pump than the prices posted on its signs and that the company offered illegal discounts if customers paid inside rather than at the pump.

Commerce ordered the company Monday to appear at an administrative hearing into the alleged violations. Commerce has only enforced the 2001 law a handful of times. Each time, owners settled and paid fines ranging from $500 to $70,000.

Commerce is investigating 10 similar cases around the state, spokesman Bruce Gordon said.

"Any time prices increase there’s more sensitivity to what people are charging at the pump. Competitors are also very sensitive because margins are very thin. Our complaints come from competitors, not consumers."