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House Passes Bill In Louisiana to Remove Gasoline Markup

BATON ROUGE, La. -- The Louisiana House passed a bill that would remove a state-mandated 6 percent markup on gasoline prices, the New Orleans Times-Picayune reported.

The bill, sponsored by Rep. Taylor Townsend, D-Natchitoches, which will go to the Senate for consideration, would set the minimum price for gasoline at the station's wholesale cost of fuel. The Louisiana Oil Marketers and Convenience Store Association supports the measure.

The existing state law requiring a retail markup has been at the heart of a revived debate on gasoline prices, with some lawmakers calling for the state to change or repeal the rules at a time of record-high prices.

Two competing proposals were placed before House members. Rep. William Daniel, D-Baton Rouge, tried to amend the bill to eliminate price controls on gas.

"Why on earth are we worried about selling gasoline too low?" Daniel said in criticism of Townsend's bill, in the newspaper report.

Supported by Wal-Mart and Murphy Oil Co., which has about 40 stations at Wal-Mart locations throughout the state, Daniel's amendment was defeated by a vote of 66-37.

As a manufacturer and retailer of gas in Louisiana, Murphy Oil has some exclusions from the existing markup law and Townsend's bill would treat Murphy no differently than other gas retailer.

Both proposals seek to change a largely unenforced 1940 state law called the Unfair Sales Act that requires retailers of all kinds to mark up their prices 6 percent.

The object of the law is to prevent deep-pocketed companies from trying to run competitors out of business and form a monopoly by setting prices low, the Times Picayune reported. Critics of the law say it is unfriendly to consumers and unnecessary because federal antitrust laws already prohibit monopolistic behavior.
The oil marketers association, which represents about 2,700 stores and 110 gasoline wholesalers in the state, has supported the law as it applies to fuel pricing, the report stated. And last week, the group last week backed off its demand to keep the retail markup.

Townsend's bill contains definitions of terms such as cost and competition to serve as guidelines for regulators trying to enforce the law.

But according to Daniel, Townsend's bill is not a real improvement over the current system. Gas is still not a free-market commodity under Townsend's bill, he said in the report. It sets up a regulatory environment that will invite unnecessary investigations by government authorities and prove costly to retailers.

Daniel also said no one will know the meaning of a number of terms, such as "legal price," set out in Townsend's bill.

Daniel's criticisms are likely to re-emerge on the Senate side when it considers the bill.
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