Skip to main content

Louisiana Legislature Agrees to Repeal Gas Markup

BATON ROUGE -- Louisiana motorists would no longer pay a mandatory 6 percent markup on gasoline, according to an Associated Press report, though gas stations would also be prevented from selling fuel below their own costs, under a bill that won final legislative passage with a Senate vote Tuesday.

The measure, which goes next to the governor's desk, would repeal a 1940 law requiring that retail items be sold at a price 6 percent higher than the retailer paid for it.

The law was intended to prevent big companies from setting their prices too low and bankrupting small businesses, but it was rarely enforced -- until earlier this year, when state Agriculture Secretary Bob Odom announced that he intended to begin enforcing it.

The bill by Rep. Taylor Townsend, D-Natchitoches, does away with the regulation, though economists said the change would have no effect on prices at the pump.

Controversy in both the House and Senate arose over another provision -- one requiring that gas stations sell gas and diesel fuel at prices no lower than what they paid for it. Otherwise, supporters of the provision said, gas stations tied to big petroleum companies could undercut locally owned stations because the corporations make so much money from wholesale oil and gas sales.

''Obviously, if you allow this type of practice, you would drive our small retailers out of business in small communities,'' said Sen. Joel Chaisson, D-Destrehan. ''Then, when their competition is out of businesses, they'd jack up their prices.''

The new law allows below-wholesale sales only on special offers, such as ''customer appreciation days.''

Murphy Oil Corp., which runs low-priced gas stations at Wal-Marts around Louisiana, launched a lobbying campaign hoping to convince enough senators that the lower-pricing limit should be removed.

Sen. James David Cain argued that adding the limits on pricing is needless government intervention in the markets. Cain, R-Dry Creek, said states that don't have such a limit on low prices -- such as Texas and Arkansas -- have lower fuel prices as a result.

''The people of Louisiana don't need to be protected from low gas prices,'' he said.

The AP reported that Cain and Sen. Ann Duplessis, D-New Orleans, offered amendments that would have weakened or removed the provision that puts limits on low gas prices, but their colleagues rejected both in lopsided votes.

Opponents of the lower-pricing limit said federal antitrust laws already protect against predatory pricing. They also said the bill would lead to excessive lawsuits and investigations by prosecutors when gas station owners accuse others of selling below cost.

Townsend's bill passed on a 33-5 vote.

This ad will auto-close in 10 seconds