A key factor of many marketing promotions is price. Let's face it, price competition is one of the easiest ways to drive business. Not so for a Wisconsin gas station owner, Raj Bhandari. Mr. Bhandari has owned the Center City BP in Merrill Wisconsin for the past year. As part of his service, he offered discounted gas to senior citizens and people who support youth sports. Senior citizens received a 2 cent per gallon discount and discount cards allowed sports boosters to pay 3 cents less per gallon. Sounds like a great idea, right? Guess again.
According to reports from the Associated Press, the Wisconsin state Department of Agriculture, Trade and Consumer Protection says Mr. Bhandari's discount program violates Wisconsin's Unfair Sales Act which requires service stations to sell gas for approximately 9.2% more than the wholesale price. In fact, the state auditor sent Mr. Bhandari a letter telling him he would face a lawsuit if he did not raise his prices, and the state could penalize him for every gallon of discounted gas that he sold. The amount of the fine would be determined by a judge.
I don't claim to be an expert on fuel laws, but this does not sound right to me. With gas prices nearing the $4.00 per gallon mark, discount programs not only help people but also create an excellent market differentiator. Learning that gas stations are required to sell gas at a set amount (or more) above the wholesale price is very unsettling. It seems to waiver on the edge of price fixing to me and prohibits free competition. What do you think?
As an aside, at least someone is benefiting from high gas prices (of course, I'm joking). Exxon reported in their 2006 results that their profit rose 9% from their 2005 profits to a record $39.5 billion. In fact, that's the highest annual profit every reported by any U.S. company. So that's where our money is going.
Comment Preview