NCPA - National Center for Policy Analysis

State Politicians Keep Gasoline Prices High

August 13, 2001

Politicians are forever complaining that energy prices are too high. But when they have the opportunity to help their constituents purchase gasoline at a discount, they reject it.

This spring, Wal-Mart Stores wanted to sell cheap gas at its parking-lot gas pumps. But that meant overturning state laws requiring a certain markup above cost at the pump. To accomplish that, Wal-Mart lobbied legislators in seven states. But the entrenched network of independent gas-station operators fought back and checkmated Wal-Mart at every turn.

  • Wal-Mart actually ended up worse off in Minnesota -- where legislators passed a tough new law marking up gas at least eight cents above its cost and allowing state officials to padlock the pumps of any violator.
  • Maryland strengthened its existing law by requiring the state comptroller to investigate allegations of below-cost gas sales within three days.
  • Lawmakers in Florida, Wisconsin, Louisiana, Tennessee and Washington all kept the status quo.
  • Twelve states have laws that specifically ban below-cost gas sales or require a minimum markup -- and another 23 states have general "fair marketing" laws that ban below-cost sales of merchandise or "predatory pricing."

Such laws date back to the Depression.

Source: Russell Gold and Ann Zimmerman, "Pumped Out: Wal-Mart's Defeat in Low-Cost Gas Game," Wall Street Journal, August 13, 2001.

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