Minnesota lawmakers propose dropping minimum markup on gas

A group of lawmakers at the Minnesota state capitol want to get rid of the minimum markup on gas, which requires retailers to charge an extra eight cents per gallon to avoid selling gas too cheaply.

Supporters of the bills argue that any way to reduce in gas prices should be pursued and that repealing Minnesota's mandatory minimum markup of eight cents a gallon over cost would only benefit consumers.

"In fact, the Federal Trade Commission has stated that these minimum markup laws actually hurt consumers, drive prices higher, and do nothing to prevent predatory pricing in the markets that have them," stated Senator Jordan Rassmussen, who represents Fergus Falls.

However, some small gas station owners disagree. Alan Merschman, whose family has owned a gas station in Bemidji since 1954, argues that the removal of minimum pricing laws would enable big box retailers and large corporate chains to undercut private owners even more than they already do.

"The bigger the outlet, the big boxes or the chain stores have bigger volume, and they get a better price. We don’t all buy at the same price," Merschman stated.

Channing Smith from The Corner Store in Inver Grove Heights testified to the same concerns, saying, "And if I don’t have the customer coming through the door to buy that high-profit stuff or what you would call high-profit stuff, inside my store. It’s not just the gasoline profits, it’s getting that customer to our site."

Legislators promoting the change argue that there are other laws in place to protect small business owners. Representative Dan Wolgamott, who represents St. Cloud, added, "The argument that we get rid of this minimum markup, the big companies are going to lower their prices, price the smaller retailers out of the market, that’s already illegal in state law and federal law."

Nonetheless, Alan Merschman contends that current law protects people like him and wonders, "If it starts and these guys get their way on this, I just have to ask you, where will it stop?"