Opinion: Editorial
A not so well-oiled machine
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Also by Badger Herald Editorial Board:
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- The Lifetime Achievement Award: ASM (May 7, 2009)
- Honest representation (May 5, 2009)
- Junger for ASM Chair (May 5, 2009)
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A federal magistrate judge recently ruled Wisconsin’s minimum markup law for gas prices unconstitutional and in direct violation of federal antitrust laws. The law — designed to prevent large oil companies from dropping their gas prices to run smaller service stations out of business — currently mandates all gas stations sell their fuel at a minimum of 9.2 percent above wholesale price.
The law, enacted in 1939, is grossly out of touch with market principles and is hurting Wisconsin consumers in the process.
The last time the state updated the law — in fact, the only time it has been updated in its 68-year history — was in 1998, when the minimum markup rate was increased from 6 percent to 9.2 percent. Since then, the minimum markup rate has remained dubiously stagnant in the midst of an almost 200-percent increase in gas prices statewide, from an average of $1 to nearly $3, according to the ruling judge.
It is highly improbable that the cost of running a service station has increased 200 percent, much less 20 percent, during the last nine years. In the meantime, though, Wisconsinites are paying artificially high gas prices to protect an apparently significant number of local mom and pop gas stations from being overrun by the likes of Citgo, a claim that in itself may not even hold true.
Since the state was not party to the lawsuit, the ruling currently does not bind the state into taking any course of action. Nonetheless, we call on Gov. Jim Doyle, who has long opposed the law, and state legislators, who have shown mixed opinion toward a minimum markup for gas, to repeal the law immediately.
In the most fundamental sense, a well-functioning free market should allow retailers to determine the price of their product and citizens to determine whether the given product, at the given cost, merits acquisition. We call on the governor and state lawmakers to revoke the archaic mandate to ensure a more natural and uninhibited determination of market prices.
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Should we revoke farm subsidies immediately too BH? I mean I love the invisible hand, but should it be allowed to choose between gas and milk?
Hey there editorial board, way to pinpoint the problem with high gas prices, the minimum mark-up. Just ignore the underlying reasons for expensive gasoline (the 200% increase you speak of), like the devaluation of our currency.
Gas would be damn affordable if our currency was worth what it was in the 1990’s. Remember when the Canadian Dollar was worth half of ours? Now it’s worth the same amount.
So, wrap your head around the worthless greenbacks in your wallet, and then whine about the minimum mark-up laws (which happen to be insignificant in the big picture).