A bipartisan group of Minnesota lawmakers is pushing for a repeal of the state’s minimum markup gas price law, which sets a base-level price for vehicle fuel.
Under current state policy, gas sellers are required to add either the lesser of 8 cents or 6% to the price of a gallon of gas, and can face civil and even criminal penalties for not doing so. While small gas sellers say the minimum price law protects them from larger retailers that might undercut mom-and-pop operations, opponents say there’s no evidence that they do anything to prevent predatory pricing and only raise prices for consumers.
Rep. Dan Wolgamott, DFL-St. Cloud, and Sen. Jordan Rasmusson, R-Fergus Falls, are carrying bills in their respective chambers that would repeal the minimum markup law, which has been in effect since 2001 after a two-decade hiatus.
“We’re introducing this legislation to address the No. 1 concern that we’ve been hearing about from our constituents back home in our communities,” Wolgamott told reporters at a Capitol news conference Thursday. “Minnesotans are getting hit so hard by rising costs and inflation, particularly rising costs of gas prices.”
There’s typically very little state policymakers can do about gas prices, which are subject to fluctuations in the global oil market. Wolgamott and Rasmusson argue that while that’s the case, eliminating a rule they say does not necessarily help retailers is one easy action a state can take.
They point to research from the Federal Trade Commission indicating that minimum markup laws cause prices to rise and ultimately harm consumers. Additionally, Minnesota and the federal government already have laws prohibiting selling gas at a significant loss in order to undercut competitors. And big-box warehouse clubs like Costco and Sam’s Club are already exempt from the minimum markup law.
Groups representing gas retailers dispute the assertion that repealing minimum markup laws lower prices. A study from the University of Wisconsin-Whitewater submitted to the Minnesota Senate’s commerce committee found that markup laws on average made gas about a cent cheaper in 13 different states, including Minnesota.
The Minnesota Service Station and Convenience Store Association testified against the bill before senators Thursday, citing concerns about small gas retailers’ ability to compete with large retailers.
Wolgamott said Minnesota is just one of a dozen or so states that have a minimum markup law and repealing the law has support on both sides of the aisle. Minnesota Republican gubernatorial nominee Scott Jensen endorsed the idea in the 2022 campaign, as has Wisconsin Gov. Tony Evers, a Democrat.
The gas bill has already passed out of the House Commerce Committee and now awaits a floor vote. The Senate committee voted Thursday to hold on to the bill for possible inclusion in a larger package of legislation later on in the session.