Originally created 06/02/04

Minnesota cracks down on underpriced gasoline



ST. PAUL, Minn. -- Just in time for the Memorial Day weekend and as the cost of gasoline continues to climb, Minnesota is cracking down on service stations over gas prices.

Prices that are too low, that is.

A law the state adopted in 2001 in an effort to protect small service-station businesses prohibits gas stations from selling gas without taking a minimum profit. These days, they must charge at least 8 cents per gallon, plus taxes, more than they paid for it.

On Friday, the Commerce Department announced a $70,000 fine against Arkansas-based Murphy Oil for breaking the law at its 10 Minnesota stations, based at Wal-Mart stores and elsewhere. They also fined Kwik Trip Inc. $5,000 for violations at one station in Apple Valley, about 20 miles south of the Twin Cities.

The two are the first fines levied under the law, and were a result of a months-long review of the stations' prices, the department said.

"It doesn't feel good," said Jeremy Haack, store leader at the Apple Valley Kwik Trip. "We try to give a little break to the consumers, and we're the ones getting fined for it?"

Carol Hockert, director of the department's weights and measures division, said she receives as many as 100 complaints a week, mostly from competitors convinced neighboring stations aren't charging enough.

In many cases they're wrong, but if a station continually sells gasoline for less than what the department knows the wholesaler sold it for, she investigates.

According to AAA, gasoline is about 60 cents higher this Memorial Day weekend than last. The average price of gas in Minnesota is $2.02.

The Commerce Department did not release exactly how low the service stations' prices were. However, Haack said he believes his station was just a penny or two out of line with local competitors, and that the station ran afoul of the law by following the prices of other Kwik Trips in the region.

Jerry Charmoli, an owner of three Mobil stations in the Twin Cities' northern suburbs, said the fines show the law is working.

He contends that large-volume retailers that sell gas below cost would raise prices once they drove competitors out of business.

"Then they're going to charge $2 or $3 dollar a gallon because they're the only ones that are left," he said.

Hank Heithaus, vice president for retail at Murphy Oil, said the company misinterpreted state law.

"It wasn't intended to violate the Minnesota law, but we felt that, yes, we probably did violate and we'd settle up and move on."

Wal-Mart spokesman Dan Fogleman said he couldn't comment on behalf of Murphy, but he said the company opposes minimum-price laws.

"We certainly believe that competition is the best way to assure the lowest possible price for consumers," he said.