Some people see Maverik Country Stores' cut-rate gasoline prices as a classic case of David sticking it to all those Goliath oil companies. Others, however, say it's actually more a case of David growing up to become a big bad Goliath himself and driving the little guy out of business.
The battle over gasoline prices - and how much retailers can charge for their product - has moved from the gasoline pumps to the Legislature in the form of HB12, a bill that would prohibit Maverik stores from selling their cash-only gasoline for 2 cents to 3 cents a gallon cheaper than their competitors. "We see it as nothing less than anti-consumer legislation," said Craig Moody, a lobbyist hired by Maverik. "It targets one company and says, `No, you can't sell your product cheaper than the other guy.' "The House passed the bill 55-14 on Thursday.
For years, Maverik stores have sold gasoline for a few pennies less than their competitors. Because the stores do not accept major credit cards, the company has cut the price of fuel by the amount it would have cost to offer credit - about 2.5 percent.
The practice of undercutting the competition by 2.5 percent has led to a rancorous relationship between Maverik stores and those that do offer credit - and have higher gasoline prices as a result.
In fact, the Utah Petroleum Association, the Western Petroleum Marketers Association, the Petroleum Retailers Association and the Utah Convenience Store Association have all lined up against Maverik. They say that Maverik's pricing practices are driving the small companies out of business, leaving only large companies.
If that happens, the large companies will be free to drive up the price of gasoline as high as they want. "What Maverik is doing appears to be consumer-oriented in the short term, but it is devastating to the market in the long term," said Glade Sowards, a lobbyist hired by gasoline retailers to bring a halt to Maverik's pricing policy.
Sowards adds, "Maverik is not the small mom-and-pop operation they want you to believe. They have more than 100 stores (in the western United States). They are the largest retailer in Utah outside of the major (oil companies)."
At the center of the controversy is the Utah Motor Fuels Marketing Act, a complex and little-understood law that mandates that gasoline retailers sell their fuel for no less than a 6 percent markup.
There are ways around the 6 percent markup requirement, and Maverik stores have used loopholes in the law that allows them to cut the price of their gasoline by the 2.5 percent they would instead have spent on credit sales.
"Maverik has carved out a niche in the marketplace - loyal customers who will drive out of their way to buy gas at 1 to 3 cents a gallon cheaper," said Maverik attorney Steve Marshall. Currently, Maverik has about 8 percent of the gasoline business in Utah.
But competitors have been complaining to the Division of Consumer Protection and the Utah attorney general's office. They were told that Maverik was within the law and that to stop the practice it would require a change in the law. Rep. Nancy Lyon, R-Bountiful, agreed to sponsor the legislation.
Jerrold Jensen, legislative liaison for the Utah attorney general's office and a former anti-trust attorney, shakes his head at the entire Utah Motor Fuels Marketing Act.
The law, he said, was enacted to protect small companies from predatory pricing by large oil companies who had the financial resources to sell gasoline below cost, drive out the competition and then come back in and raise prices.
Utah lawmakers put stiff penalties on companies that sell gasoline for less than a 6 percent markup. Current law calls for a $5,000-per-day fine for each station that violates the law and also allows for treble damages and punitive damages.
"It is an unusual law in that the state is not going after collusion or antitrust. The state is going after retailers selling a product at the lowest cost to consumers," Jensen said. "We don't tell Albertsons they have to sell food at a 2 percent markup or Nordstrom they have to sell clothes at a 40 percent markup. But we tell gas stations they have to mark up gas by 6 percent."
The bottom line, Lyon said, is that competition drives the price of gasoline, and the more competitive the marketplace the better Utah consumers will be for it. "It is in the consumer's best interest. But Maverik is driving out the competition."
The irony of all the legislative attention being heaped on Maverik stores is the fact that under current law any gasoline retailer, from Conoco to the mom-and-pop store on the corner, is free to have two prices for gasoline: one for credit and one for cash.
In fact in other states, gasoline pumps frequently list two different prices depending on the method of payment. But in Utah, retailers have chosen to offer one price for gasoline regardless of whether the consumer pays with cash or credit.
A second irony is that if Lyon's bill passes and Maverik stores are forced to sell their gasoline at higher prices, the company will actually make more money. And their customers will be paying more.
Lyon doesn't dispute that. But, she added, "the bill is saying they (Maverik stores) have to play by the same rules as everyone else."