Friday, September 16, 2005

Minimum Markup Misconceptions

The afternoon guy here in Milwaukee has decided that the minimum-markup brouhah is really inconsequential; thus, he has decided to oppose the law requiring minimum markups but doesn't really give a rat's patoot whether the Legislature repeals it.

That is to say, he opposes the war, but supports the troops.

His conclusion is based on a lot of faulty logic. For instance, he stated that WalMart is behind the drive to dump the legislation because it is in their interest to occasionally sell gasoline at a loss, as is common in retailing.

Actually, whether WallyWorld wants it or not is irrelevant. I know of nobody who will drive 20 miles to save 4 cents/gallon on gasoline; I seriously doubt that thousands of motorists will drive 20 miles to save TEN cents/gallon. Gasoline is largely purchased from convenient outlets, period. WallyWorld does not have nearly enough locations to make them 'convenient' to the vast majority of Wisconsin motorists.

Secondly, the afternoon guy (and a lot of other people) don't understand gas-station economics. NOBODY makes any money on gasoline alone--at least not enough to talk about. The big money is made on the "other" stuff: candy, coffee, OTC drugs, oil, gas-additives, and (if one is in an old-fashioned 'gas-station,' the "back end"--automotive repairs.

Sorry, afternoon guy: the principle is important, and the arguments adduced by those who claim otherwise are simply wrong, or deceptive. Nothing new about that--but one expects a lot more from someone who claims to be analytically acute.

7 comments:

Neo-Con Tastic said...

You'd be surprised how far some will drive for cheap gas down here. We have one station that's selling at $2.51/gallon. That's about a $0.25 less than our average. There's commonly a line to get gas there. Florida was considering a temporary gas tax freeze which would drop it by about another $0.25 but then realized the affect would hurt the government more than help the citizens. I've been desensitized. If it makes it down to $2.25, I'll start drinking it again.

Anonymous said...

Would you support getting rid of the law that says gas stations can only raise their gas prices once a day?

Because that's anti-free market too

Dad29 said...

Neo: 20 gallons at .25/gal is $5.00; that justifies about 40 miles of driving at the outside.

Here, we deal with differences of maybe .05/gal, although I did find a spot on North Ave this AM which was at $2.78, about .11/gal under the market.

Anon: of course. The restriction is stupid.

Reif said...

You tell em' Mr. dad.

I'm glad to see a post that stays consistantly free market from start to finish and in the comments.

You won't find that in many of the afternoon guy's columns.

Neo-Con Tastic said...

I love all of these "Free Market" comments about you dad29. Dad29 = Free Market? Tell that to Wal-Mart.

Dad29 said...

We are not here discussing the demolition of the US' manufacturing capacity, thus the demolition of our ability to defend ourselves--not to mention the demolition of the economic model which created the Middle Class--and, through both Commerce and State policies ignoring treaty requirements which would stop such demolition /destruction.

We are here discussing a legislated favoritism--legislated by a State, not the Fed; and certainly not a treaty-item.

IOW, "Fair Trade" is not germane, NeoCon.

Distinctions, distinctions.

M.Z. Forrest said...

Though a little late to this, I finally turned off Sykes and Wagner, because I couldn't stand this nonsense. I'm assuming you are referring to Belling, who is usually reasonable. Let me get this straight, Gas goes from $1.75 to $3.00 a gallon over serveral years, and the issue is that the gss station owners margin might have gone from $0.06 to $0.12. Ugh!