WI Gas Ruling Good News For Free Market, Consumer

While the nation seems to be moving toward more and more government control of all aspects of business, there is some good news locally for the free market.  Federal Judge Rudolph T. Randal rules that the 70 year old minimum markup law on gas is unconstitutional.  The link to that story is here

This is something long overdue.  The markup law mandated gas stations charge the consumer 9% over the wholesale price, or 6% over the price the station paid, whichever is higher.

I was first alerted to this law by a local gas station I frequent in Brookfield.  They used to run a special where they would sell premium gas for mid-grade every Sunday.  Since I have one of those cars that requires premium, I would work my schedule and gas fills around that Sunday sale which would save me a couple of bucks every fill.

One sunny Sunday, I pulled up to the pump and read a sign saying they had to stop the premium for mid-grade sale because of Wisconsin's minimum markup law.  A competing gas station reported them.  This seemed so absurd to me that I didn't believe it.  After doing some research, I found that it was indeed true that our state did indeed mandate how much profit a gas station much charge!

In real terms, 9% of a gallon of gas comprises $0.16 a gallon at today's prices, which is currently around $1.85.  When prices rose to about $4.00 a gallon, the minimum markup goes up to $0.36 a gallon.  Just because gas went up that much does not mean the cost of delivering that gas went up as much, which is why the percentage is so rediculous.  But gas stations couldn't do anything to help the consumer because of the law.

Now, don't expect gas stations to drop their prices by 16 cents.   They still have to make a profit.  But the beauty of this is, if a gas company can come up with ways to be more efficient and cost effective than thier competition, they become more competitive in the market.  They now have an incentive to do so, and we as consumers can reap the benefits.

Now all we need is for the local area to actually start selling non-reformulated gas.  The federal mandate has been removed, yet we still have the horrible ethanol that gets lower gas mileage, destroys small engines and adds more pollutants to the air.  But for now, we'll take this small victory.

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