He said the Maryland law dampens competition. "It forces companies to increase the price artificially, and it forces companies to become price followers and not price leaders," Cortez said. "All of that results in increasing gas prices."
But independent operators said the chains sometimes keep prices down for extended periods to put competitors out of business. They said the chains can do so by relying on profits from stores in less competitive markets.
Joseph Bryan of Ridge, Md., fills up in Great Mills. "Wherever it's cheapest, that's where I get it," he says.
(Marvin Joseph -- The Washington Post)
"We bring our price down to where we feel we need to make a profit," said Elliott Burch Jr., president of Burch Oil Co., which operates about 15 stations in Southern Maryland. "They're always undercutting us. . . . My plight is no different from the folks that complained against the Wal-Marts."
Since the Maryland law took effect in 2001, the state has logged 31 violations. State officials said no citations were issued because the stations had agreed to raise prices.
In the most recent incident, last Tuesday, a state investigator questioned operators of a BJ's, Sheetz and two Wawas about their $1.999-a-gallon prices after receiving a complaint from Burch Oil, officials said.
Sheetz and the Wawas said they lowered prices to match the price of the nearby BJ's, according to the state. BJ's denies it was the first to drop to the lower price and says the price was still above cost. But BJ's did not have paperwork on hand to show how much it paid for the gas.
So the Maryland official made a calculation based on average wholesale prices and concluded that the stations should be charging no less than $2.049 a gallon. Station managers at Wawa and Sheetz responded to the investigator by saying, "We're happy to raise our prices. We're tired of this game that BJ's keeps playing," according to Robert A. Crawford, assistant director of licensing and registration for the Maryland comptroller.
BJ's does not "lead markets lower" by reducing prices to gain customers but rather lowers prices to meet the competition, said Brian J. Earley, vice president of the Natick, Mass., company's fuel and automobile operations. Maryland officials, however, said they had received reports to the contrary.
While the state successfully pushed up prices, market forces eventually regained control.
Late in the week, several stations were again selling gas for $1.99 a gallon. State officials said the lower prices appeared permissible because wholesale prices had declined.