N. Bama Gas Stations Could Face Trouble for Selling Gas Too Cheap

There's been a gas war going on in the town of the town of Rogersville in northwest Alabama. Several stations there recently cut gas prices to as low as $1.88 per gallon, well below the regional average.

Unfortunately for consumers, though, the low prices are likely to be short-lived, as some competitors have complained that the price-cutters aren't playing fair. The local District Attorney has also taken notice, warning that the low prices may violate Alabama's Motor Fuel Marketing Act, which prohibits retailers from selling fuel below cost. (I've blogged on this previously here.)

Alabama isn't unique in keeping gas prices artificially high. Maryland regulators recently stepped in to enforce a similar law in their state. Todd Zywicki has more on Maryland's law over at the Volokh Conspiracy.

The chief argument for this law is that it is supposed to inhibit monopoly in the petroleum and convenience store business. That's hogwash. Many convenience store chains already sell gasoline at or just above cost, relying almost exclusively on in-store sales to generate profits. All the law does is to stifle competition, putting certain marketing strategies off limits and propping up retailers that fail to adapt to new market realities. With gas prices persistently high, now would be a perfect time to repeal this silly law.