Report recommends the Legislature and the governor repeal the minimum markup law as applied to motor fuel.
During the hot summer months, many motorists are looking to the government to alleviate the distress wrought by high gas prices. Yet, in many cases, governments themselves are contributing to the pain at the pump.
Wisconsin is currently one of 18 states which have “below cost” laws that apply to motor fuel. Wisconsin’s “minimum markup” law generally requires a markup of 9.18% on gas sold in the state, to prevent businesses from undercutting the prices of their competitors. Yet the law actually prevents consumers from getting a good deal on gas.
This report finds the following:
- Wisconsin’s minimum markup law adds $990 million to the annual price paid by consumers, between $267 and $278 million of which is beyond what a normal profit margin would yield.
- Wisconsin motorists currently pay 30.2 cents per gallon as a result of the minimum markup law. As a result, minimum markup has almost eclipsed the state’s 32. 9-cent auto fuel tax, which is currently 9th highest in the nation.
- As the wholesale price of gas grows, so does the amount per gallon motorists have to pay as a result of minimum markup. In January of 1998, when the wholesale price of gas was 64 cents per gallon, the minimum markup stood at 5.9 cents per gallon. In July of 2008, the wholesale price of gas stands at $3.29 per gallon, with tl1e per-gallon minimum markup amount at 30.2 cents – an increase of 400% in ten years.
- ln the past year, the amount the minimum markup law adds Lo a gallon of gas has increased 44% – from 21 cents per gallon in July of 2007 to 30.2 cents per gallon in June of 2008.
The report recommends the legislature and Governor repeal the minimum markup law as applied Lo motor fuel entirely. At a minimum, the Legislature should act to cap the per-gallon markup at 21 cents per gallon, where it stood twelve months ago.
