Repeal of minimum gas pricing urged

Minneapolis Star Tribune/June 29, 2005
By Pat Doyle

Saying a state law contributes to Minnesota motorists being "gouged" at the gas pump, a senator renewed his attempt Tuesday to repeal minimum pricing for gasoline.

Sen. Charles Wiger, DFL-North St. Paul, wants to repeal a requirement that retailers add 8 cents to the wholesale cost of gasoline and the state and federal taxes on it. "We don't require hardware and grocery stores to sell power tools and apples at artificially inflated prices, and we shouldn't mandate an eight-cent boost in gas prices."

But the Minnesota Service Station Association defends the law as needed to prevent predatory pricing by large gasoline retailers. The association argues that big service station chains would lower prices to drive out smaller operators, then raise prices when they faced less competition.

There are about 3,200 service stations in Minnesota and about 75 percent are independent, according to the association.

"How fair is it in the suburbs or greater Minnesota when all the mom and pop stations have to shut down?" asked Sen. Steve Murphy, DFL-Red Wing, who opposes the repeal.

Wiger's proposal passed the Senate during the regular session but stalled in the House. He said he was renewing his call to repeal the pricing requirement because the Minnesota Commerce Department took action this week against Midwest Oil of Minnesota, accusing it of operating gas stations that violated the requirement. One of the stations, Oakdale Exxon, is in Wiger's district.

The Commerce Department said it discovered that the station and two others sold or advertised gas below the minimum allowable price on several occasions. It ordered them to cease and desist.

Wiger said he's received calls from constituents who patronized the Oakdale station and complained about action taken to stop its pricing arrangement.

The law establishing specific minimum pricing was enacted in 2001 and requires retailers to take the wholesale price of gasoline plus taxes and add 6 percent or 8 cents a gallon to it, whichever is less. The recent high price of oil means that 8 cents has been added recently to the price of a gallon of gas.

Opponents of the minimum-pricing arrangement say it isn't needed to protect consumers because the Federal Trade Commission can protect consumers from any monopolies that large retailers might establish.

But Murphy said the federal government is toothless and won't intervene.

"They will not take on big oil," he said.