A Problem That Doesn't Exist?

Published in CSP Daily News

La. senate panel votes to eliminate 6% gas markup

BATON ROUGE -- Louisiana would eliminate a state law that forces gas stations to hike fuel prices by 6% over their costs, under a bill passed by a Senate committee on Wednesday, said the Associated Press.

But passage of State Representative Taylor Townsend's bill came after a fight over whether the measure eliminates one form of government regulation and adds another.

As reported in CSP Daily News, the bill would prohibit stations from selling fuel at prices below what they paid for ita provision aimed at Murphy Oil Corp., which [image-nocss] independent station owners suspect will run them out of business by selling gasoline far below their costs at the stations it operates at Wal-Marts.

Murphy launched a lobbying campaign trying to convince members of the Senate Commerce Committee to change the bill and soften provisions regarding how low gasoline prices can be. The company brought two LSU professors to Wednesday's hearing to argue that imposing such price limits would ultimately lead to higher gasoline prices. LSU economist Loren Scott told the committee that business owners should be allowed to sell gasoline at the prices they see fit. He said no company has ever gained a monopoly and would not in the future.

Scott called the bill an attempt to protect ourselves from a problem that does not exist.

A majority of committee members disagreed, voting down suggested amendments and sending the House-passed bill to the Senate floor without objection.

Townsend and opponents of his bill agreed on the measure's main thrust: that the state should get rid of a portion of a state law that forces businesses to mark up most retail items by 6%. Townsend's bill would eliminate that mandatory markup on gasoline and diesel fuel.

Both sides also agree that the bill, if passed, would have little or no effect on prices at the pump.

Townsend and independent station owners told the committee that the measure's price limits would prevent companies from using predatory pricing to put smaller retailers out of business. Townsend said companies like Murphy make the vast majority of their profits on wholesale sales of fuels made at their refineries, so they can afford to sell gasoline at the retail level at prices far below those of independent stations.

This bill will promote competition, said Townsend (D).

Opponents said federal antitrust laws already protect against predatory pricing. They also said the bill would lead to excessive lawsuits and investigations by prosecutors when gas station owners accuse others of selling below cost.

You're creating a system that is unmanageable, said State Sen. Ann Duplessis (D).