UWEC students complete study into mysterious gas prices in Eau Claire

By: Aaron Dimick, Kevin Hurd Email
By: Aaron Dimick, Kevin Hurd Email

EAU CLAIRE, Wis. (WEAU) -- Day after day, it's the one price we all have to pay. But you might be paying more or less in some cities than others.

Over the summer a group of UWEC students took on a project to try and figure out why drivers sometimes pay more to fill up in Eau Claire. And on Wednesday, they made the results public.

Steve Duffenbach was one of the people who came to hear the presentation. He was surprised to learn that Eau Claire's placement on the oil pipeline doesn't impact the price.

"Found out tonight that doesn't make any difference, we're not at the end of the pipeline and it doesn't have anything to do with what they charge us," he said.

The researchers say the pipeline ends in Stanley. But they did find that competition, or the lack thereof, plays a role in higher prices.

The study shows having two major gas station chains, Kwik Trip and Holiday, plays a role but they did not look into collusion, since the state's investigation found that was not an issue.

Kwik Trip says it cannot comment on such things and Mega Holiday did not return our call today.

And then there is the finding that Eau Claire's gas stations are farther apart versus in other cities. Council Member Jackie Pavelski says that finding may factor into city planning.

"Where we place gas stations might be a real consideration at some time," she said.

But perhaps the biggest surprise to all was not just a factor that affects Eau Claire gas prices, but prices statewide.

The Minimum Markup Law requires stations to price gas 6% above wholesale and penalizes them if they don't.

"I don't know what the solution is other than to suspend the minimum markup law for one year and see what happens," said John Prince who attended the meeting.

Pavelski says this study is a step in the right direction.

"We will maybe not answer that question definitively, but we certainly have a number of reasons that add to why that does happen," she said.

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EAU CLAIRE, Wis. (WEAU) -- It's been a mystery to Chippewa Valley drivers for years: Why are gas prices higher and nearly all the same in the city of Eau Claire than the surrounding area?

Local college students hope to answer some of those questions.

Seeing so much frustration from local drivers about the prices, professors and students from the University of Wisconsin-Eau Claire approached the city to look into them.

After collecting facts and figures during the summer and analyzing them this fall, the students are ready to release their findings.

The students presented their research the city’s Fiscal Policy Advisory Committee Wednesday night.

The UWEC researchers compared our gas prices and stations to those in Hudson, Stevens Point and Wausau as well as three cities in Minnesota and three in Iowa.

They kept tabs on prices using gas-monitoring websites and other data collection sources.

“We collected data over the summer and then disseminated the data over this past semester,” said Ryan Weichelt, an Assistant Professor of Geography at UW-Eau Claire.

Weichelt and Dr. Laura Middlesworth from the Economics Department advised the students in the study.

What the researchers found was three main contributing factors behind our mysterious prices.

In other cities, the students found a bigger variance of retailers.
But in Eau Claire?

“We found out that Kwik Trip and Holiday tend to dominate the market here,” Weichelt said.

Another factor is how far apart our stations are placed.

“The gas stations are the most spread out in the city compared to even Wausau, Hudson or Stevens Point where they're more concentrated,” Weichelt said.

They found a big impact on prices is Wisconsin’s Minimum Markup Law.

“Gas wholesalers are required to sell their gas at a certain minimum markup above cost. They can go above this, but they have to sell it at least that much,” said Emily Anderson, a UWEC senior and student researcher for the study.

Anderson said stations have to sell their gas at least 6% above the wholesale price or face penalties.

So what does this all mean?

Their study has concluded that having two big retailers with stations spread awkwardly across the city has led to less competition.

“A Holiday station doesn't want to be competing with another Holiday station. When there are less firms, it tends to lead to higher prices,” Anderson said.

They say when you throw in Wisconsin’s state gas tax and the Minimum Markup Law; drivers are going to see similar prices.

While some have complained Eau Claire’s prices are higher than surrounding communities, the researchers said our prices are on par with cities of a similar size in the badger state.

To change the status quo, Weichelt said people could put pressure on the state to change the law.

“Or we can then put pressure on the companies to explain why they do engage in the pricing they do engage in,” Weichelt said.

Some have claimed the gas giants are working together to fix prices.

But with a 2011 Department of Justice investigation not finding any evidence of collusion, the university researchers didn't attempt to look into a conspiracy.

Weichelt said they instead focused on the geography and economics behind the issue.

“This is going to have an impact on the way people perceive things in town and could maybe potentially lead to change. I don’t think we could get a much more real world example than this particular one for the students to engage in, and they did a great job,” Weichelt said.

The study didn’t find any evidence that a gas pipeline or trucking in gas have any impact on prices.

WEAU 13 News reached out to Kwik Trip and Mega Holiday to explain their similar prices.

A representative from Kwik Trip said the company doesn’t comment on gas pricing.

Mega Holiday didn’t return messages.


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