As gas prices rise and drivers fume Wisconsin residents may be surprised to learn that their ire should be directed more towards state regulators and lawmakers than oil companies.

According to a state law called the Wisconsin Unfair Sales Act station owners must mark up the gasoline that they sell by 3%, 6% or 9.18% depending on location and other factors to cover a proportionate part of the cost of doing business. Violators are subject to a fine of $5,000 per offense. Yes that is correct, the state believes that selling gas at a discount isn’t fair to consumers.

This law has gone largely unnoticed until recently when the Center City BP in Merrill, Wis. Was ordered by the Department of Agriculture, Trade and Consumer Protection (DATCP) ordered owner Raj Bhandari to raise his prices or face a fine. What was Bhandari’s offense? He gave senior citizens a 2 cent per gallon discount and sold sports booster’s cards that entitled them to a 3 cent a gallon discount. To most people this sounds like a great marketing effort as well as building goodwill in the community. And then along came the regulators to spoil the party.

With the average price of gas in Wisconsin at $3.14 a gallon versus the nationwide average of $3.05 this law is largely responsible for the uncompetitive pricing of gas throughout the state and may be costing the average Wisconsin driver an extra $100 or so in gas costs. So rather than look for cases of potential price gouging the state is seeking out those gas stations that are willing to trim their profits in an effort to gain a competitive advantage and help the consumer.

In 2003 then state representative Shirley Krug (D) received a response from the Federal Trade Commission after she asked for an opinion on the Unfair Sales Act. The FTC’s response was that only pricing below cost can be considered predatory and that the act likely restricts competition and harms consumers. There you have it, the consumer protection division is enforcing a law that harms consumers at least when it come to gasoline pricing. And yet the law is still in place.

Since the act is based on percentages the higher wholesale gas prices go so will the retail price. If wholesale prices are $2.50 a gallon retail prices will be about 8 t0 23 cents higher, but at $3.00 a gallon retail prices are mandated to be 9 to 27 cents a gallon higher which is great for the station owner but not for the consumer.

Maybe the DATCP should change the word consumer with competitor to more accurately reflect the effect this act is having on Wisconsin drivers.

Share This

• 
• 
• 
• 
• 
• 
• 
• 
• 

About the author