Wis. Fuel Market Tightens

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Wis. Fuel Market Tightens

LA CROSSE, Wis. -- A portable sign advertises a May 18 auction at the Frank-Len Inc. Automotive Center in La Crosse, Wis., which closed in March 2002. The windows of the Holiday Stationstore there have been boarded up, since it closed April 30. And some La Crosse service stations are increasing their automobile repair business, rather than trying to meet gasoline prices in La Crescent, Minn. (and those of La Crosse stations that are matching La Crescent prices).

All are reminders that gasoline prices in the La Crosse market have been among the lowest -- if not the lowest -- in Wisconsin for more than a year, reports the La Crosse (Wis.) Tribune.

Some La Crosse gas stations, especially those closest to La Crescent, continue to match the prices offered in Minnesota, whose state gasoline tax and environmental fee is 11 cents per gallon lower than Wisconsin's. Owners of other La Crosse stations say they'd lose money on gasoline sales if they did that. A local price war broke out shortly before the February 2002 opening of the Saver Stop gasoline and convenience store in La Crescent. It's the first gasoline stop motorists come to as they drive from downtown La Crosse to La Crescent.

The Frank-Len facility closed for several reasons, including the fact the family-owned business could not sustain the losses caused by the gas price war, Frank-Len President Ron Schnick said last year when he announced it would close. "The recent price war created by the higher gasoline taxes in Wisconsin, compared to Minnesota, forced many La Crosse stations to sell below wholesale to meet competition," he said at the time. Some La Crosse stations dropped their prices to meet those of Saver Stop and other La Crescent stations, the report said.

Last week, Ron and his brother Pete said their family has found a buyer for most of the automotive center. But the buyer doesn't have any use for the remaining tools, equipment, vehicles, shelving and shelving, so the Schnick family will auction those off May 18. Ron and Pete and their siblings own Frank-Len, which their father Len Schnick and Frank Dittman started 72 years ago.

Ron said the Schnicks are in the process of selling the garage/office building to a developer, who apparently will demolish the structure and construct a new commercial building. The Schnicks aren't sure what type of business will occupy the new building. The developer doesn't plan to buy the warehouse on the Frank-Len property, which is still for sale.

AAA Wisconsin said in April that the La Crosse market has the lowest gasoline prices in the state. That was still the case last week, in the organization's daily survey of prices in six Wisconsin metropolitan markets. As of Friday, according to the AAA Wisconsin survey, the average price for a gallon of regular unleaded gas in the La Crosse market was $1.458, compared with a statewide average of $1.523 and a U.S. average of $1.501. Friday morning, prices at some La Crosse stations were as low as $1.369.

Until the price war started last year, Ron Schnick said last week, "I can't remember a time when (the La Crosse market) had the lowest prices in the state." But he added, "I think more and more people were gradually (over the years) driving to Minnesota" to buy gasoline at lower prices than they could get in Wisconsin, even before Saver Stop opened.

After the 50-year-old Holiday station closed April 30, a spokesman said his company decided having three Holiday stations in the La Crosse market was one too many, because of market conditions.

The Schnicks had no predictions last week on whether more La Crosse stations will close. "The ones that are surviving are doing something else," Ron said. The conventional gas stations are putting more emphasis on automobile repairs or convenience store sales. "And the Kwik Trips can balance the losses at a few locations against the rest of the company," Ron said.

The Schnicks stressed that they have no complaints about the La Crosse-based Kwik Trip chain. "They play fair," Ron said of Kwik Trip. "They charge fair prices. I think they had to do something" to keep their market share when the Saver Stop station opened last year.

"We aren't going to lose gas volume - we won't be undersold by any of our competitors," said Gary Gonczy, Kwik Trip's director of marketing.

Downtown La Crosse is close to several La Crescent gas stations, Gonczy noted. "They have the advantage because of the lower state tax," he said of Minnesota stations. "So what we have to do, so we don't give up the volume to people going across the river, is match those prices in Minnesota with the stores we have in the downtown area." If competitors in other parts of La Crosse lower their prices, "Then we start matching further out," Gonczy said.

Wisconsin's minimum markup law prohibits the sale of gasoline at below cost. But exceptions to the law are made to allow a retailer to match a competitor's price - as long as the retailer notifies the state Department of Agriculture, Trade and Consumer Protection.

"We are filing with the state agency on a regular basis," Gonczy said of La Crosse Kwik Trip locations that are matching gasoline prices of stations in La Crescent or elsewhere. "Many times that even extends to the Onalaska market, based on how far out competitors bring that competition up the road."

Lower Minnesota cigarette tax also a factor

Minnesota's lower state cigarette tax also puts Wisconsin gas stations along the state border at a disadvantage, said Bob Bartlett, president of the Petroleum Markets Association of Wisconsin/Wisconsin Association of Convenience Stores. Minnesota's state cigarette tax is 48 cents per pack, while Wisconsin's is 77 cents per pack.

"The combined tax disparity between the two states of both the motor fuel tax and the cigarette tax - two of the top things that any convenience store sells -- makes it extremely difficult to stay competitive" for businesses on the Wisconsin side of the Mississippi River, Bartlett said.