Is Utah's 18-year-old petroleum retail marketers law keeping gas prices reasonable while protecting mom-and-pop gas stations from going out of business?
Or is it ineffective, outdated and actually keeping gasoline prices artificially high?Rep. David Zolman, R-Taylorsville, wants to repeal the act.
But fellow lawmakers on a legislative committee aren't so sure. After a lengthy discussion Wednesday, they decided to study the matter for a couple of months.
Doug Hyer, a gasoline wholesaler who also owns a few gasoline stations, says without the act, he and other small operators could be forced out of business by "predatory pricing" practices of big oil companies and gasoline outlets.
But Zolman says such worries are not real.
The largest gasoline marketer in Utah is Maverik Country Stores, which just recently crept past 10 percent in market share, he said. All the largest gasoline sellers together don't have 50 percent of the Utah market.
Gasoline sellers are some of the most competitive businesses around, Zolman said. He added that when Albertson's and other grocery retailers finish getting into the retail gasoline sales business, the act will become even more worthless.
Paul Ashton is the executive director of the Utah Retail Marketers Association and owns two small gasoline stations.
He said the act may have problems. But just having it there may be keeping some small operators in business.
The act is complicated. And that's one of its problems. In general, it says that a gasoline retailer can't sell gas for less than 6 percent above the cost of doing business.
But it's really impossible to determine what that means, Zolman maintains.
Utah is one of only 13 states that have such an act. And more and more states are repealing such laws, Zolman said. When the Montana Legislature refused to repeal its gasoline pricing act, a citizen initiative was started and passed last year.
Such pricing acts are generally seen by the public as keeping gasoline prices high because a retailer can't sell it for less than he bought it for, he adds.
According to AAA, gasoline prices hit an all-time high in the Salt Lake area last week at $1.35 a gallon.
Zolman read a headline from a newspaper that said a gasoline retailer had been charged with the crime of selling gasoline too cheaply -- a situation that could happen here. He said that is ridiculous and against "capitalism and the free market system."
But Ashton said without the act it's clear to him that especially in rural areas a big retailer could move in, sell gasoline at below cost, drive mom-and-pop gas stations out of business, then have a monopoly and raise gas prices to gouge consumers who must buy locally.
No way, Zolman said.
He said more and more "gasoline stations" are really mini-markets and the selling of gasoline is a minor part of the store's profits. So he says you couldn't drive someone out of business by a gas war.