Law may need modification, but not repeal…
by Jack E. Lohman
It is again raising its head. In 1939 our state legislature passed a law that prohibits the selling of gasoline without first adding 9% in profit (3% at the wholesale level and 6% at the retail level).
The purpose of the law was to prevent large retailers from selling at 0% profit until they drove the smaller retailers out of business, and then upping their prices in a captive market.
So now there’s an effort to repeal this law. Let the market decide the price, say some business advocates like Brian Fraley, a Republican consultant who has not denied being hired and paid by the major resellers.
“This adds a whopping 36 cents a gallon to the cost of $4.00 a gallon gasoline” Fraley says, and certainly that’s the correct math. But repealing the law does not mean that the 36 cents will be eliminated and returned to the consumer. It could make zero difference, which the evidence below supports.
Surely if the Wal-marts and Targets of the world decided to forego their 24 cents of profit to get people into their stores, we could potentially save the public up to 24 cents per gallon. But it hasn’t happened in the states without minimum markups, and it likely won’t here. These guys don’t discard profits flippantly, especially their highest profits.
Two things bother me in this whole discussion. First that the Fraleys of the world are using “apple pie” arguments, like “this is a free market issue,” when in fact it is fueled by the moneyed interests. That he accepts their cash to carry their water is certainly his choice, though I’d prefer some honest disclosure on his part.
Second, this “free market” effort is proposed by the very same politicians who voted 100% against the free market when they yielded to the moneyed interests involved in wine distribution in Wisconsin. Seems the free market matters here but not there, don’cha know. It’s a double standard bought and paid for by campaign cash, and our esteemed politicians are right in the middle of it.
The cash flow in our political system is disturbing — on all bills, not just this one. If this bill was repealed without money coming from the Wal-marts of the world, we could accept it as politicians doing their job. But is isn’t and they aren’t. This state legislature makes its decisions in the best interest of their campaign funders, not their constituents.
That’s why we must have a 95% turnover in November. Wisconsin Democracy Campaign called it right when they ranked our legislators on political reform. Nine — get this, only NINE — state politicians have consistently had the public’s best interest in mind. The rest have to go.
Neither extreme is satisfactory. Neither total regulation nor total free market. Neither total socialism nor total freedom to put your wealth above all others. I prefer a regulated free market, but I don’t like the cash from special interests that interferes with political loyalties. I don’t like politicians that sell their sole for a buck, not even to the interests I support.
So I’d feel a lot better if I knew that the politicians were not taking campaign money and would sit down and honestly reach a solution in the best interest of the public. Even if I don’t support the decision, I’d know it was reached without selling out to the highest bidder.
This law should be modified to remove the 3% profit requirement by wholesalers but retain the 6% profit requirement by retailers. Let’s see what happens and revisit the issue in a year.
But remember, the difference in gas prices is more affected by state taxes than by the presence or absence of a minimum markup law. Compare these gallon prices MINUS state taxes:
So even with the minimum markup law, Wisconsin’s base prices are lower than in adjoining states.
Again, state taxes are a function of our moneyed political system. The road builders are generous contributors, but do they need all of the extra work our politicians dish out to them?
And why is it that the very conservatives that hate high taxes, support the moneyed political system that fuels them?