Bill to reduce Wisconsin's mandatory fuel markup dies

| 5/15/2006

An effort in the Wisconsin Legislature to reduce the state’s minimum markup requirement for motor vehicle fuels has died. It sought to save drivers nearly 8 cents per gallon at the pump.

The Senate voted 19-13 May 4 to send the bill back to committee for more study. The move effectively killed the bill – SB215 – because the session wrapped up the following day.

Wisconsin law now requires markups of at least 9 percent to the price consumers pay for motor fuels, alcohol and tobacco.

Adopted during the Depression era, the rule requires wholesalers to charge at least 3 percent more than they paid. Retailers in turn must add on at least 6 percent more.

The Wisconsin law was designed to prevent businesses from selling at a loss in order to drive out competitors.

Sponsored by Sen. David Zien, R-Eau Claire, and Sen. Tom Reynolds, R-West Allis, the bill would have eliminated the 3 percent markup for wholesalers and reduced the retailer markup to 4 percent, plus 3 cents per gallon.

It also would have prohibited the sale of fuel below cost, and prohibited the sale of fuel as a loss leader.

“I don’t think most of my colleagues understand how offensive it is to the average person that Wisconsin law requires a 9.18 percent markup on (fuel) in order for (fuel) stations to make a profit,” Reynolds said in a written statement. “Rather than protecting the profits of a few businesses, we should be protecting the pocketbooks of people who are struggling to afford basic necessities because of the high price of (fuel).”

The Coalition for Lower Gas Prices, a group that includes government and business – including Wal-Mart and Murphy Oil – pushed for an end to the markup.

Craig M. Thompson, legislative director for the Wisconsin Counties Association, previously told the Milwaukee Journal Sentinel that revising the markup law would be a way to reduce fuel prices without cutting sales tax on fuel, which pays for roadwork.

The Wisconsin Petroleum Marketers and Convenience Store Association, a group representing 2,000 fueling stations, convenience stores and automotive businesses, likes the law as it is.

Bob Bartlett, the group’s president, told the newspaper consumers benefit from the current law because more competitors stay in business, saving consumers money through price competition.

Zien said he will continue to push for the repeal of the minimum markup. The earliest it likely could be brought back up for consideration is in the legislative session that begins in January 2007.