Western Petroleum Marketers Association - WPMA

Motor Fuel Marketing Act Reauthorization
The Utah Petroleum Marketers and Retailers are pleased that the Legislature's Business and Labor Interim Committee voted in September to reauthorize the Motor Fuel Marketing Act for an additional five years. Senator VanTassell noted the declining number of independently owned fueling stations in rural Utah, and the importance they play in the rural marketplace.
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The "Utah Motor Fuel Marketing Act" (UMFMA) has been a Utah law since 1981, recognizing that petroleum is of strategic national importance and a limited and finite resource, and should therefore not be sold below cost, or used as a short-term loss leader. In 2001, the legislature changed the law's definition of cost to eliminate any retail mark up, and to make the Attorney General's job easier in calculating if a sale was "below cost." The Act is up for reauthorization in 2012.

Predatory pricing exists today and typically happens when a mega-retailer such as Walmart enters a market, then dramatically undercuts prices - making profits in its other stores or on other products or even in other states - until it has driven smaller competitors out of business and captured the market. With competition gone, the mega-retailer is then free to charge whatever price it wishes for its products.

Utah's MFMA includes a civil action option for a retailer that does not require injury to the entire competitive market to prove predation, however, the UMFMA does not guarantee a profit for retailers, and it does allow any retailer to sell motor fuel at cost, so mega-retailers are not prevented from realizing efficiencies from their vertical integration. We believe Utah's MFMA is benefiting consumers by fostering competition, which in turn keeps consumer prices down.

During the 2010 Legislative Session, Governor Herbert and Senator Curt Bramble wanted to eliminate the 1.31% vendor discount currently provided to Utah's retailers for being the State's tax collectors. At three Senate committee meetings, a ground swell of opponents from grocery and convenience stores showed up to oppose this proposed elimination of the collection allowance. Senator Bramble's bill was never formally heard in committee.

However, if State tax revenues don't continue to improve over last year, this issue will likely come up again, and retailers will have another fight on our hands during the 2011 legislative session to retain this vendor fee that helps compensate Utah's independent retailers for collecting and remitting state taxes to the tax commission. Next year, we may need legislative help to retain the 1.31% tax collection allowance.

Convenience stores sell more than 80 percent of the gasoline purchased in the U.S. In addition to offering convenient locations and long hours, pay at the pump technology and easy in-and-out access, convenience stores are owned by small businesses, with owners that live and work in their neighborhood and provide a significant and continual investment to their communities.

If you would like additional information about petroleum related issues, both local and national, please contact our state Director John Hill at (801) 521-8340, or by Email: HillMgmt@aol.com, or our Lobbyist Gary Thorup at (801) 598-6810, or by Email: Gary.Thorup@hro.com.