Business group asking lawmakers to stop predatory gas pricing
(Associated Press)
SIOUX CITY, Iowa - An Iowa business group is trying to stop large retailers such as Wal-Mart and Hy-Vee from what it says is predatory gasoline pricing.
The Iowa Business Alliance is seeking legislation that would halt the practice, which could drive other firms out of business, said Natalie Battles, a spokeswoman for the group, which has 103 gas stations and distributors among its members.
She said a bill is currently being drafted for consideration.
For the first time in 30 years, Battles said fewer convenience stores have opened than have closed in Iowa.
She said the problem is that independent convenient stores get into financial straits when residents drive to larger towns to buy cheaper gas at hypermarkets, which she said are large retail stores that have a combination of profit centers, such as a supermarket, photo center and drug store.
Some Sioux City-area convenience store owners complain that new Super Wal-Mart stores, with a gas business on premise owned by Murphy USA, have affected business. They also pointed to two Hy-Vee stores that have added pumps and give gas discounts for the purchase of other goods such as prescriptions.
Battles said sometimes that discount lowers gas prices below cost. That may mean a net loss at the pumps for hypermarkets until they force local, independent operators out of business and then raise prices to cover the difference, she said.
Steve Adams, who operates five Breake Pointe stores in Iowa, including in Le Mars, said he's being pushed toward closing as an area Hy-Vee store adds gas pumps, compounded with the recent opening of a Super Wal-Mart.
He said the impact of the hypermarkets made he business suffer "a substantial net loss" in 2004.
"Since the Hy-Vee and Wal-Mart have opened, they have consistently been below our cost" of gas, he said. "It is just a bad situation where they can be allowed to sell gasoline that far below competitors' costs."
Hy-Vee officials said the company prices gas just as it does its other products.
"We try to provide a good price for our customers, not only to buy gas but also to buy other things to get the (gas) discount," said Hy-Vee spokeswoman Ruth Comer.
A Wal-Mart spokesman said many of its gas stations are operated by a third-party, which set prices independent of Wal-Mart decision-making.
"The actual setting of that price is up to them," said spokesman Marty Heires. "We simply lease the land where they operate."
Battles said customers should have low prices, but not at the expense of allowing alliance businesses to compete in the market.
"It is not about profit for the retailer, but about creating a level playing field," she said.
