Raucous Debate Over Markup

Published in CSP Daily News

House OKs bill to kill law; becomes referendum on Wal-Mart

BATON ROUGE, La. -- The Louisiana House passed a bill Wednesday that would remove a state-mandated 6% markup on gasoline prices, but critics called it fake reform that would burden business with unnecessary regulation, reported The Times-Picayune.

Greeted with raucous debate on the chamber floor, House Bill 763, sponsored by State Representative Taylor Townsend (D), now goes to the state Senate. Townsend's measure, supported by the Louisiana Oil Marketers & Convenience Store Association (LOMCSA), would set the minimum price for gasoline at the station's [image-nocss] wholesale cost of fuel, said the report.

The existing state law requiring a retail markup has been at the heart of a revived debate on gasoline prices, with some lawmakers calling for the state to change or repeal the rules at a time of record-high prices.

As reported in CSP Daily News, an intense lobbying effort in the past week led up to the vote, as two competing proposals were placed before House members. Lawmakers reportedly have been assaulted with phone calls and pamphlets as the two sides fought for their version of the legislation.

State Rep. William Daniel (D) tried to amend Townsend's bill to eliminate price controls on gasoline. Why on earth are we worried about selling gasoline too low? Daniel said in criticism of Townsend's bill.

Supported by Wal-Mart and Murphy Oil Co., which has about 40 stations at Wal-Mart locations throughout the state, Daniel's amendment was defeated by a vote of 66 to 37. As a refiner and retailer of gasoline in Louisiana, Murphy Oil has some exclusions from the existing markup law. Townsend's bill would treat Murphy no differently than other retailer, the report said.

Oil marketers have accused Murphy of using profits from its oil production arm to prop up below-wholesale pricing in the company's refinery and retail division. Murphy has said that is untrue and that the company wants to make a profit in all segments of its business.

Townsend's bill contains definitions of terms such as cost and competition to serve as guidelines for regulators trying to enforce the law, the newspaper said.

But Daniel said Townsend's bill is not a real improvement over the current system. Gas is still not a free-market commodity under Townsend's bill, Daniel said. It sets up a regulatory environment that will invite unnecessary investigations by government authorities and prove costly to retailers, he added. Daniel also said no one will know the meaning of a number of terms, such as legal price, set out in Townsend's bill. Daniel's criticisms are likely to re-emerge on the Senate side when it considers the bill, said the report.

Daniel did manage to pass a different amendment by a vote of 55 to 46 that changes a single word in Townsend's bill. Although Townsend's original bill defined competition as something that goes on between two retailers located near each other, the amendment takes out the word two. The change broadens the meaning of competition and lowers the risk that one station might bring legal action against another.

Wal-Mart distributed lobbying fliers to all House members' desks, and the floor debate took on overtones of a referendum on the chain, the paper said. The discussion at times became loud, with passionate speeches and hoots from throughout the chamber. House Speaker Joe Salter's stern instructions for members to follow the rules of floor debates went unheeded for a time, it said. In a shouting match with Daniel, State Rep. Troy Hebert (D) sounded off with complaints about Wal-Mart's employment practices and the retailer's impact on competitors, said the report.

Final passage of Townsend's bill was 99 to 4.