- Associated Press - Friday, December 26, 2014

FRANKFORT, Ky. (AP) - A Kentucky lawmaker says his hometown city hall intruded into the free market by going into the retail gas business, and he’s preparing legislation that could shut down the pumps to the public.

Republican Sen. Chris Girdler’s proposal comes months after the city of Somerset opened a retail gas station. The no-frills venture on the outskirts of town unnerved filling station and convenience store operators. Girdler said his bill seeks to assure private business that government won’t compete for their customers.

“If that has ramifications for the Somerset city gas station, then so be it,” Girdler said in a phone interview. “Government has a hard enough time running itself. The last thing it should attempt is running a business.”

Girdler is drafting the bill for the legislative session that opens in January. He said he has been working with the Kentucky League of Cities and Kentucky Association of Counties on the legislation.

The measure would define traditional and essential government services, but would include a process for governments to be able to seek to provide services outside that definition, he said.

Somerset Mayor Eddie Girdler said the proposal by his state senator amounts to “a big overreaction to a unique situation here in Somerset that has really worked.”

“Our feedback from our customers is overwhelmingly positive,” Eddie Girdler said.

The Girdlers are distant relatives. The mayor said the senator’s father is his first cousin.

The city-run Somerset Fuel Center opened to the public in July. The station was converted from use by government vehicles into one that also caters to anyone looking to fill their tanks.

Since then, it has generally sold about 1,800 to 2,000 gallons of gas daily, the mayor said.

That’s a typical amount of gas sales for many convenience stores in Kentucky, said Ted Mason, executive director of the Kentucky Grocers Association and Kentucky Association of Convenience Stores.

Since the city went into the retail business, plunging oil prices have led to much cheaper gas at the pump.

But Eddie Girdler said the city-run station has achieved the goal of bringing Somerset gas prices in line with prices elsewhere in the area. That has created a financial boost for Somerset businesses, as people who used to bypass the town due to higher gas prices are now shopping there, he said. In the past, Somerset gas prices were often 20 to 30 cents a gallon higher than in neighboring towns, he said.

Chris Girdler disputed that, saying a multi-year survey showed that Somerset wasn’t out of line with gas prices in other area cities. Somerset’s average gas price equaled the price in two other communities, was a penny a gallon above another city, 2 cents above another and within 5 to 7 cents of two other cities, he said.

Somerset, a town of about 11,000, is situated near Lake Cumberland, a popular fishing and boating destination.

Dan Gilligan, president of the Petroleum Marketers Association of America, said a staff attorney involved in the industry since 1973 could not recall another city getting into the retail gas business.

The mayor didn’t suffer any at the ballot box from the venture, easily winning a third term last month.

The amount charged motorists at the city-run station is based on an average regional price for gas, and includes a small markup to cover costs. The city isn’t out to make a profit, the mayor said.

Critics of the venture say the government has no business inserting itself into the private sector, and one store owner branded it as socialism when the city-run station opened.

Mason said the city-run station is siphoning money away from private competitors. Not only that, it’s cutting into the number of customers who go inside the stores to buy food or drinks, he said.

“A taxpayer-subsidized government facility competing in the … gasoline marketplace with private businesses required to invest their own capital at substantial risk is simply unfair competition,” he said.

Chris Girdler said government should “get out of the way” of private business rather than compete with it. The senator said he worries the venture in his hometown could lead to other government forays into the private sector.

“The next thing that’s going to happen, people are going to say milk and groceries are too much money, and you’re going to have governments trying to open up grocery stores,” he said.

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