Take steps to save money on gas - and support the minimum markup law

As gas prices rise, many are quick to call it highway robbery. But getting a handle on rising fuel costs is about more than the price at the pump. Each one of us can make a big difference with better vehicle maintenance. After that, understanding the real forces that drive gas prices can make us all better consumers.

Gas prices, like everything else in the economy, are driven by supply and demand. Simple car maintenance can help stretch this strategic resource. For example, almost 3 million cars in Wisconsin have under-inflated tires. With prices at $3 a gallon, proper tire inflation will save the average driver $90 a year.

Advertisement

An additional 800,000 cars in Wisconsin have dirty air filters that cost them $125 a year in gasoline.

Oil changes save an additional 1 percent, and other measures can account for 5 percent to 20 percent. If we all did this, we could reduce demand enough to affect prices. The quicker you take action on your car maintenance, the faster you'll begin to offset the recent rise in gasoline prices.

Another way to keep gas prices in check is to keep Wisconsin's Unfair Sales Act on the books. Wisconsin first adopted this fair-marketing legislation on fuel to protect small businesses from large, predatory companies.

While some politicians will tell you that minimum markup laws cause higher prices at the pump, the latest findings by UW-Whitewater professors show the original intent still holds with the added benefit of savings to consumers.

The researchers concluded Wisconsin consumers save up to $28 million a year because of this increased competition among gas stations fostered by the minimum markup law. Wisconsin has more gas retailers per capita than nearly every other state.

By way of comparison, California, a state without fair-marketing legislation, has the fewest convenience stores per capita in the country and the highest gasoline prices. And a recently completed study of the fair-marketing act in Minnesota showed that the minimum markup laws reduce prices.

Minnesota had a minimum markup law, repealed it in 1984 and then reinstated it in 2001. In studying gas prices from 1984 to 2004, UW-Whitewater researchers found that consumers in Minnesota paid nearly 2 cents a gallon more after they had repealed the law than they would if they had kept it. Now that the law has been reinstated, the price disadvantage paid by Minnesota consumers has disappeared.

Wisconsin gas prices at the pump are greater than neighboring states because of motor fuel taxes. Wisconsin's taxes total 32.9 cents per gallon, making it among the highest in the nation. In fact, Wisconsin's motor fuel tax is 12.8 cents higher than Minnesota and 11.6 cents higher than Iowa.

It's not the retailer that is seeing the benefit of higher gas prices. Retailer margins are lower than ever, averaging 2 percent for Wisconsin gas retailers. As we're discovering with the recent hurricane damage to refineries, the price of crude oil and refinery capacity are the biggest drivers of gasoline prices.

Oil prices set by international cartels account for half the price of oil. And more than half of the U.S. refineries have closed in the last 25 years. These closings reduced competition and supply. When you add natural disasters like the recent hurricane that hit the nation's refineries, serious price increases occur because of the inelastic nature of the supply chain.

Nearly every recent sharp price spike has been due to crude oil prices and refinery capacity, not retailer margins.

So, take action today. Cut your fuel use with better maintenance and car-pooling. And call your legislators and tell them that competition protected by the Unfair Sales Act, the state's minimum markup law, is helping keep high prices from going even higher.