Tuesday, October 16, 2007

Minimum mark-up

I like the reasoning of Judge William E. Callahan, Jr. in his ruling against the Wisconsin motor fuel minimum mark-up law.
The percentage was last adjusted in 1998 when it moved from 6% to 9.18%, the judge noted. In the past nine years, inflation has gone up 27% but gas prices have gone up 200%, he wrote.

"Given that a markup of 9 cents per gallon was deemed an accurate estimate of the 'costs of doing business' in 1998, it seems curious that a markup or 25 to 30 cents per gallon, which is approximately 200% greater than the markup in 1998, is an accurate estimate of the 'costs of doing business' in 2007," Callahan wrote in an opinion issued Friday.
This wasn't ruled on legal intricacies, but on common sense. The minimum mark-up is not meant to cover the cost of the fuel, it is to cover the cost of selling this fuel. Despite the huge increase of petroleum commodity and refining costs in the last decade, the cost of the retail transaction may have gone up only slightly.

Those kids behind the counter are not making much more than in 1997 and pay-at-the-pump technology has reduced the number of in-store transactions. Frankly, the cost of selling gas has probably dropped substantially in the last decade.

H/T - Dad Two-Nine

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