Friday - February 24, 2006

Gas Wars

Quick! How many of you can remember “gas wars”? If you’re under forty you probably don’t know what I’m talking about.  For the benefit of those youngsters, let me explain: back in the 1950’s and 1960’s, service stations (yeah, they did full-service way back then) would get into competitions with each other and start dropping their prices to pull in more customers to their place. It was fun. It was also legal. Fast forward to 2006. Gas prices are no longer fun and gas wars are illegal. On the Suckage Scale™ this ranks as a 9.3 ....

Midwest Oil Fined For Selling Gas Too Cheaply
February 24, 2006 – 1:05 AM

(MINNEAPOLIS STAR-TRIBUNE)

The Minnesota Commerce Department on Thursday announced plans to fine a gas station chain $140,000 for repeatedly selling gas below the state’s legal minimum price. The fine against Midwest Oil of Minnesota is twice as large as any imposed on a company since 2001, when the state established a formula based on wholesale prices, fees and taxes to determine a daily floor for gas prices.

The price law was intended to prevent large oil companies from driving smaller competitors out of business, but some critics argue it fails to protect consumers. According to the Commerce Department, the Midwest-owned stations in Anoka, Oakdale and Albert Lea sold gas below the minimum price on 293 days in 2005. Kevin Murphy, deputy commissioner of the department, called the violations “willful, continuing, and egregious and warrant a substantial penalty.”

The company has 30 days to contest the fine by requesting a hearing. In previous cases, companies were fined anywhere from $500 to $70,000 for selling gas too cheaply. And in those cases, the companies and the department generally had agreed on the amount of the penalty. Midwest had not cooperated with the department on a penalty, and was accused by the department of using several delaying tactics before the matter could be resolved.

Midwest officials couldn’t be reached for comment Thursday. Midwest is a subsidiary of the Wisconsin-based Science and Technology Institute, led by Dr. R.C. Samanta Roy. Gov. Tim Pawlenty and several Minnesota legislators have urged a repeal of the state’s minimum price rules. Critics have argued that it ends up costing most customers an extra dollar or more to fill up, without adding to tax revenues.

Defenders of the law say it’s critical to protect small and medium-sized stations. They note that unlike large chains, those stations often can’t cushion below-cost gasoline with sales of other merchandise.

Posted by The Skipper     on 02/24/2006 at 09:10 AM   
Filed Under: • Economics •  
• Comments (14) • Trackbacks(0)  Permalink •  

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Not that very many people ever read this far down, but this blog was the creation of Allan Kelly and his friend Vilmar. Vilmar moved on to his own blog some time ago, and Allan ran this place alone until his sudden and unexpected death partway through 2006. We all miss him. A lot. Even though he is gone this site will always still be more than a little bit his. We who are left to carry on the BMEWS tradition owe him a great debt of gratitude, and we hope to be able to pay that back by following his last advice to us all:

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It's been a long strange trip without you Skipper, but thanks for pointing us in the right direction and giving us a swift kick in the behind to get us going. Keep lookin' down on us, will ya? Thanks.

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