Utah's fuel act: Helping gas stations at your expense?


Many people – citizens and lawmakers – would think it ridiculous for government to prohibit R.C. Willey from giving away hot dogs and soda Saturday mornings as an enticement for passers-by to look at furniture. They might also object to a prohibition on pedicure discounts designed to get women into salons to buy top-grade nail polish.

For some reason, though, many of these same people do not object to a law that forbids gas stations from giving similar direct discounts to Utahns on gasoline. When it comes to cheap gas, they are fine with telling business owners what they can and cannot do – directly impacting the wallets of Utah drivers.

Since the Utah Legislature is considering whether to reauthorize a law that attempts to control gas prices (the Motor Fuel Marketing Act), we interviewed several people who voiced their opinion on whether the Legislature should renew the law or repeal it. Watch the video report below to find out what they said …


Here’s the script of the video:

VOICE-OVER: The Fuel Marketing Act is up for review this next legislative session, and some legislators say if the act is repealed, Utahns may see gas prices go down. Representative Derek Brown is one of the legislators who want to see the act repealed.

REPRESENTATIVE DEREK BROWN: “It’s an act that we passed about 30 years ago, which basically says you can’t sell gasoline below cost.” 1:43: “It’s one of the few laws where we basically say to the private sector: Here’s what you can sell your products for and here’s what you can’t sell the products for.”

VOICE-OVER: The act was created to protect the small, independent gas stations from being run out of business by the larger, name-brand gas stations. But Representative Brown thinks that the Fuel Marketing Act is unnecessary.

REPRESENTATIVE BROWN: “Their real concern is that some of these larger companies are going to come in and undercut their prices, they’ll go out of business, and then once they’re gone the large stations will then ratchet up their prices and we’ll be paying exorbitant amounts for gas. The reality is that just doesn’t happen. And what you really can do is look at the 13 states that have laws like ours, compare them with the 37 states that don’t and see if there’s a difference, and the reality is there really isn’t any difference.”

VOICE-OVER: The Federal Trade Commission, or FTC, did exactly that. They looked at the 13 states that have laws similar to Utah’s Fuel Marketing Act, Representative Brown explains.

REPRESENTATIVE BROWN: “The FTC has looked at almost every single one of these and has issued letters about them. And every time the FTC comes back and they say, ‘You know what? This is anti-competitive,’ and our concern is not that it doesn’t just protect consumers but it actually hurts them because it results in higher gas prices.”

VOICE-OVER: But John Hill with the Utah Petroleum Marketers and Retailers Association explained on Wednesday, September 21st, at the Legislative Interim Day that he has a different opinion regarding the FTC.

JOHN HILL: “The FTC has not been a friend of small business, they have been a friend more to the larger organizations … but there have been other letters from the FTC that say, ‘Well, motor fuel marketing acts may or may not affect prices.’ ”

VOICE-OVER: Sutherland Institute’s Derek Monson explains more about the Fuel Marketing Act.

DEREK MONSON: “The Motor Fuel Marketing Act, first of all, means that it’s harder for working families and individuals in the state to make ends meet because we’re making it illegal, or attempting to do so, to sell cheap gasoline. It also means that we are deciding to trust government rather then our communities in the market to decide what businesses we want in our areas and cities and towns and counties. Last but not least, it means that we are undermining the free market by protecting a certain small group of business interests from competition from others because the smaller groups of businesses depend on expensive gasoline prices.”

VOICE-OVER: So why does Sutherland Institute think that the Fuel Marketing Act should be repealed?

DEREK MONSON: “We think that local communities within the framework of the free market and in the pursuit of happiness should be the ones deciding what businesses locate in their neighborhoods. So communities up in Logan, down in St. George, down in Ephraim, should be the ones deciding whether a certain gas station locates in their neighborhood, not a state government located in Salt Lake City. Additionally, we think it’s the free market where individuals, families, businesses, other organizations are determining the costs of goods and services that has proven itself to be the greatest source of economic well-being and prosperity, both for families, communities, and society as a whole. The Motor Fuel Marketing Act undermines that entire process by trying to say you cannot sell gasoline at a certain price, and that is completely against the free market.”

VOICE-OVER: So will the state continue to undermine local communities and the free market by renewing the Motor Fuel Marketing Act, or will it choose to support the free market and communities by letting the act sunset? We’ll have to wait until the 2012 legislative session to find out. Remember, all public policy changes lives. For Sutherland Institute, I’m Alexis Young.