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April 09, 2005

You Must not Think Bad Thoughts

Wog brought my attention to this bit from yesterday's Strib.

On Thursday, the Exxon store -- which bears no other name but "This Is My Station" on the marquee -- advertised regular unleaded gas for $2.11 per gallon. But a sign at the station told customers "ALL GAS DISCOUNT 10c PER GALLON," effectively dropping the price four cents below Minnesota's legal minimum price Thursday of $2.05.
"Legal minimum?
In 2001, Minnesota mandated a formula based on wholesale price, fees and taxes to determine each day a floor for gas prices that effectively prevents stations owners from selling gas below cost.

"The intent of the law was to prevent the big players from putting smaller operators out of business," Commerce Department spokesman Bruce Gordon [and my former colleague from KSTP-AM] said.

He added: "Our experience is that there are some David vs. Goliath complaints, but more David vs. David."

So to prevent small, uncompetitive gas stations from going out of business - a favor the state provides to very few other businesses - the state prevents gas stations from having price wars?
"How do you possibly give that much money away?" asked Sid Haugtvedt, whose Phillips 66 station a half-mile away advertised regular unleaded for $2.13 a gallon
They're obviously idiots. Obviously.

Read the whole thing. It gets worse.

I'll be so happy someday when Minnesota joins the free world.


Posted by Mitch at April 9, 2005 08:58 AM | TrackBack
Comments

What would we think if we had to pay the REAL price for our gas? What if we had to factor in the cost of protecting the oil companies and their pipelines There is a military cost to our oil isn't there? Is that not a part of the cost of gasoline?

Posted by: JRB at April 9, 2005 10:14 AM

I'll write about this on Monday, Mitch, but it happens both for gas and cigarettes.

JRB -- we do factor those in. It's called "taxes". Think how much we pay in taxes for gas. Do you think it all goes for roads?

Nice to see Bruce Gordon has a good gig.

Posted by: kb at April 9, 2005 10:24 AM

Gas in Orrock Township at Sandune Stop is $1.99 this afternoon.

Posted by: Shawn Sarazin at April 9, 2005 02:00 PM

What are the directions to Sandune Stop?

Seriously, government mandated minimum prices are evil and harmful to the economy. Sorry to be redundant.

Posted by: Old Whig at April 9, 2005 09:24 PM

I'm not going to argue in favor of the law, but calling small gas stations as "uncompetitive" isn't altogether fair. They can compete in other ways, usually by offering products and services you won't find at a Sam's Club gas station. They don't make money on gas; they make it on pop and jerky. They're more convenient than Rainbow for a can of Coke, for example. But when the Sam's Club takes away half the gas business, it kills the walk-in traffic, and that kills the bottom line.

It's not so much a problem in a metro area; there'll always be a Holiday or SA here. It's probably more of a problem in smaller towns where a ten-pump Wal-Mart loss leader can kill the convenience store down the block, and then the town's lost a place where people can get a gallon of milk on the way home.

Again, not a reason for the state to get involved. (The state of Minnesota probably put more gas stations out of business years ago with regulations that mandated removal of old underground tanks, but that's another story.) But I'm not cheerful about another class of small local businessmen going under when Wal-Mart comes to town.

Posted by: Lileks at April 9, 2005 09:29 PM

No, I don't want the small business owners to go out of business because Wal Mart lumbers along. However, why are consumers penalized by state government? How is it the state's job to tell a business owner how much he or she can charge for a commodity? I don't get that at all.

Since Wal Mart and friends aren't going away any time soon...I think the question for those small [insert business of your choice here] is "what advantage do I offer to a customer? What are my unique selling advantages? [insert answers like...customer service...assistance with installation...a loaner car...a baker's dozen...etc.]

When not selling real estate...I have a background in training and consulting - and still provide customer service training through a local company. It's the single best competitive advantage any small business has...they just don't know how to build it and leverage it.

Jane N-B
www.TwinCitiesRealEstateBlog.com

Posted by: Jane N-B at April 11, 2005 10:25 PM

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Posted by: Food Recipes at December 3, 2005 03:28 AM
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