May 29, 2004
Minnesota Fines Gas Stations for Low Prices
By Kevin
Several gas stations tied to Wal-Mart have been charging prices for gasoline that are too low, according to the Minnesota Commerce Department:
The state adopted a law in 2001 that bars gas stations from selling gas without taking a minimum profit.See also this Walter Williams editorial on minimum gasoline prices:These days, stations must charge at least eight cents per gallon more than they paid.
The Commerce Department is now issuing its first fines for breaking the law.
It fined Arkansas-based Murphy Oil $70,000 for breaking the law at its ten state stations, which are based at Wal-Mart stores. A Murphy Oil official says the company misinterpreted state law.
The department also fined one Kwik Trip station.
Lobbyists such as WMDA Service Station & Automotive Repair Association, the Gasoline Retailers Association and the Petroleum Marketers Association of America are able to sell legislators on the fairy tale that if high-marketing gasoline outlets such as Wawa, Sheetz, Wal-Mart and others are allowed to charge prices that are too low, they’ll drive all other gasoline stations out of business. Having done so, these high-marketing outlets could charge any price they pleased and make huge profits.Posted at May 29, 2004 01:23 PMIn economics, we call this strategy predatory pricing. It’s an argument that has a ring of plausibility, but there’s little evidence anywhere anytime that a predatory pricing scheme produced results even remotely close to what would-be predators envisioned. Questioning this fairy tale and asking for evidence would never cross the mind of a legislator.
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With soaring gasoline prices beginning to cause economic hardship, Minnesota's Commerce Department is cracking down on gas stations for charging prices that are too low. "The state adopted a law in 2001 that bars gas stations from selling gas without... [Read More]