On Thursday, March 2, the Commerce and Consumer Protection Committee heard a bipartisan bill authored by Senator Jordan Rasmusson (R-Fergus Falls) to repeal the state’s minimum markup on gasoline.

“I regularly hear from Minnesotans who are concerned about inflation, and especially, the high cost of gas,” Rasmusson said. “To help lower the cost of gasoline for consumers, my bill would repeal Minnesota’s minimum markup law on gas. Our state’s consumer laws should be in place to protect, not harm, consumers. Yet Minnesota’s minimum markup is a hidden gas tax that hurts consumers by making it illegal to sell cheaper gas.”

Under current Minnesota law, petroleum marketers are required to charge an 8-cent markup per gallon of gas, which is known as the ‘minimum markup.’ And if a petroleum marketer sells gas below the minimum markup, they could be subject to civil and criminal penalties.

“The petroleum marketers will say that the minimum markup law prevents competitors from undercutting the market and driving competition out through predatory pricing,” Rasmusson continued. “A robust academic literature, however, demonstrates that the main outcome of minimum markup laws is higher gas prices for consumers. Predatory pricing below cost is already against both state and federal law and will remain so if this bill passes.”

A 2017 study released by the Wisconsin Institute for Law & Liberty found that minimum markup laws on gasoline have had “no effect” on the number of gas stations in a state. Further, the study did not find any “evidence whatsoever that retailer attrition has been any different in the states with such laws.” Simply stated, “artificially inflating prices has not saved ‘mom and pop’ retailers.”

In addition, the Federal Trade Commission (FTC), the nation’s anti-trust police, reviewed minimum markup laws on gas sales and determined that these laws inhibit competitive pricing strategies that benefit consumers. The FTC also states that the type of predatory pricing that minimum markup laws are supposedly designed to prevent against does not occur, especially in gas retailing. Under both Democratic and Republican administrations, the FTC has opposed laws like Minnesota’s as being anti-consumer and leading to higher prices.

“Currently, the vast majority of states do not impose a minimum markup on selling gas, and for good reason. By repealing this harmful law, Minnesota will legalize cheap gas, through a commonsense, bipartisan solution, and provide vital economic relief to Minnesotans,” Rasmusson concluded.

Rasmusson initially learned about this issue when Dr. Scott Jensen, the GOP gubernatorial candidate, proposed eliminating the minimum markup law as part of his plan to reduce gas prices. In addition, Governor Tony Evers, a Wisconsin Democrat, has also proposed eliminating his state’s minimum markup law to save consumers money at the pump. 

The legislation already passed the House Commerce Committee with bipartisan support, and after the Senate Commerce Committee hearing, it was laid over for possible inclusion in a larger bill package. A clip of Rasmusson presenting the bill in committee can be found, HERE.

On the same day as the Senate committee hearing, Rasmusson also attended a press conference with the House author of this bill, Representative Dan Wolgamott (DFL-St. Cloud), and Senate co-author, Senator Judy Seeberger (DFL-Afton). A recording of the press conference is available on the Senate Media Services YouTube page.