US Magistrate Judge William Callahan should be hailed as a hero. This week he may have done more to lower gas prices in Wisconsin than any politician will ever be able to do. Judge Callahan ruled that the state's minimum mark up law is unconstitutional. The judge believes that requiring gas stations to increase the price of gas by 9.18 percent from what they pay the wholesaler is an inaccurate estimate of the cost of doing business.
The ruling creates a very difficult position for Governor Jim Doyle. The past few summers, Doyle has held press conferences standing in front of gas station signs showing prices at three dollars a gallong telling us that the evil big oil companies are gouging us and it is time for the federal government to do something about it. Every time he held one of those dog and pony shows I would ask why the gov didn't repeal the minimum markup law--since that would save us as much as nine percent per gallon. The governor's pat answer: "that wouldn't save that much--and don't forget the oil companies are making record profits!!"
Let me whip out the calculator here Governor. Nine percent of three dollars a gallon is 27-cents...times 18-gallons per fillup...that's $4.86 I just saved at the pump...times two fillups a month--that's about ten bucks...times twelve months a year...that's 120-dollars annually. For the Governor, whose investment portfolio includes sizeable stock holdings in evil big oil companies 120-bucks probably isn't that much--but to me thats a few extra date nights with the wife.
I can't wait to see if Doyle orders the Attorney General to appeal this ruling. The state actually wasn't a party to the federal suit--as two gas station owners were fighting over fair pricing. Will the gov be able to make political hay if prices drop by twenty-some cents a gallon when stations decide they won't live in fear of state prosecution and price gas at what they want to. Will we see old-fashioned price wars--with stations competing to build customer base with prices that might (for a short time) actually be a loss leader.
Another thing to keep an eye on: how soon after the state decides to drop the law the backhoe is out in the Wal-Mart parking lot breaking ground for their new self-service pumps. Yes, Wal-Mart does sell gas--in states where minimum markup laws do not exist. To some gas station owners that might sound like the death toll--we all know how Wal-Mart destroys all local retailers--but I don't think that will happen. I've been filling up at stations with prices five cents a gallon less than the station across the street and seen the same number of people at the more expensive pumps.
So let's plan the parade for US Magistrate Judge William Callahan--the man who may have brought sanity back to gasoline pricing.