Government controlled pricing - where is the free market?

[janeeyre]

http://www.cbsnews.com/stories/2007/05/08/ap/strange/main2776798.shtml

The government is dictating pricing. What happened to free markets? YiKes!! -- or is this a method to control a potential oil monopoly?

 

[Mwsinron]

Its a law he was breaking it. Not some super duper conspiracy theory.

 

[samclem]

I think the question is--why is the state government dictating a price for motor fuel? (or, specifically, a retail price some set amount above the wholesale price of gasoline). This gaurantees consumers will not get the price advantage of paying a lower spread (where a retailer may have found a way to be more efficient).

 

[ERD50]

Well, obviously we can't just have people going out there and offering lower prices to consumers! I mean, what's next - total anarchy! Blood in the streets! Cats and dogs....

Nice to see the government on the job, protecting consumers from....what?

But the state Department of Agriculture, Trade and Consumer Protection says those deals violate Wisconsin's Unfair Sales Act, which requires stations to sell gas for about 9.2 percent more than the wholesale price.

Anyone in WI know the reasoning behind this law? Crazy!

-ERD50

 

[mja]

Anyone in WI know the reasoning behind this law? Crazy!

I'm in WI, but you've got me; no idea.

I believe they also don't allow gas stations to change their fuel price more than once a day.

 

[farmerEd]

Its hardly an isolated incident...milk for example is also price controlled, as are cigarettes I believe.

 

[bssc]

Arizona has a similar law. In theory it is to prevent big corporations (think Rockefeller) from lowering their prices to put the independent service stations out of business and then, when they have a monopoly, raising the prices up to something unimaginable, such as $2 a gallon.

Arizona also protects consumers by preventing them from ordering new cars over the internet since it would be unsafe. You have to buy them from a local dealer.

 

[FinanceDude]

Well, obviously we can't just have people going out there and offering lower prices to consumers! I mean, what's next - total anarchy! Blood in the streets! Cats and dogs....

Nice to see the government on the job, protecting consumers from....what?

Anyone in WI know the reasoning behind this law? Crazy!
-ERD50

It's called the "minimum markup law". It's designed to keep station owners from undercutting each other (yeah right). I think the real reason is to help the state keep their HIGH gasoline tax revenue to line the pockets of paving companies who support the governor keep spending hundreds of millions paving every road in sight..........

 

[Zathras]

The state's tax revenue from gas is unaffected by the price of gas as it is a straight cut (so many cents per gallon). The only affect higher prices has is likely a lowering of their tax revenue as people drive less or buy more efficient cars.
As for free market, where have you been? We haven't had a true free market economy for decades. Note the many examples above, and the artificially low price for gas as the goverment subsidizes big oil.

 

[TromboneAl]

That's the same thought that I had when I read the story. But, as pointed out, we don't live in a totally free market.

 

[justin]

The state's tax revenue from gas is unaffected by the price of gas as it is a straight cut (so many cents per gallon). The only affect higher prices has is likely a lowering of their tax revenue as people drive less or buy more efficient cars.

I don't know how Wisconsin's state gas tax is structured, but in North Carolina, our gas tax is partially variable based on the average price at the pump. Higher prices mean more tax revenue for the state.

 

[Zathras]

Ah, interesting, I stand corrected. Thank you Justin. Is it a percentage or is it kind of a step system (i.e. 1=2 dollars tax is 20 cents, 2-3 dollars it is 24 cents, etc).
In Minnesota it is a flat 22 cents a gallon. I mistakenly figured other states also used a flat rate. Wisconsin, it appears, indexes their rate for inflation and adjusts it once a year.

 

[justin]

Ah, interesting, I stand corrected. Thank you Justin. Is it a percentage or is it kind of a step system (i.e. 1=2 dollars tax is 20 cents, 2-3 dollars it is 24 cents, etc).
In Minnesota it is a flat 22 cents a gallon. I mistakenly figured other states also used a flat rate. Wisconsin, it appears, indexes their rate for inflation and adjusts it once a year.

NC's is based on a percentage plus a fixed amount. 7% of average wholesale prices for some earlier 6 month period plus 17.75 cents per gallon fixed. That worked out to 30.2 cents per gallon total right now.

Here's a tidy summary of the 50 states' gas tax rates and method of calculation.