Fact check: Will Gov Evers plan decrease gas prices?

Fact check: Will Gov Evers plan decrease gas prices?

Gov. Tony Evers says he wants to increase the state gas tax to pay for part of his proposed $600 million investment in state transportation.

"That means our plan actually makes it possible for you to pay less at the pump than you do right now," Evers said in his Thursday budget address.

But is he right? Let's start with the 8 cent gas tax increase. Economists generally agree gas is a "price inelastic" good. That means, because there are few alternatives, consumers will pay for extra costs. 

"Consumers will just go out and pay the extra amount if they're charged that, so most of the gas tax, if not all of it will be passed along to the consumer," UWM Economics Department Chair Dr. Scott Adams said.  

The minimum markup law Evers wants to repeal requires gas stations to charge at least 9.18 percent above wholesale price. It's a depression era law, that some argue protects small companies from being undercut by larger ones.

Evers claims by repealing the law, he can save consumers 14 cents at the pump, but most think even without the law, there will still be some markup.

"The retailers, they still want to cover their costs, and hopefully maximize their profit," UWM Urban Development Chair Dr. Lingqian Hu said.

Meanwhile, some smaller companies are concerned about the law change.

"They're a bigger chain," said Kelly Turncott, manager at Maas gas station in West Allis.  "They can take that hit. We can't."

So at the end of the day will Evers' plan create higher or lower prices at the pump? Economists say, while they think it will slightly increase prices, we can't know for sure.

"Removing the markup will cause some reduction in price," Scott said. "So you don't know whether or not they'll completely offset each other. Maybe even some months they will and some months they won't."

Share this article: