Driving The Little Guy Out

Across rural America independent gas stations are going out of business, reports CBS News Correspondent Wyatt Andrews.

Garnett Ladd is closing the Ladco Stations his grandfather began in Clarksville, Tenn. He said he could not compete with the chain retail stores.

More and more, franchises are selling gasoline in these small towns. Wal Mart and K-Mart owns gas stations in Clarksville. Ladd says they often sell to consumers for less than he pays wholesale.

"We cannot, as an independent marketer, continue to sell gasoline at or below our cost," said Ladd.

But for consumers, discount gas from chain stores is the success story of the year. Retailers, like Sams Club, doubled their share of the gas market last year using a simple strategy — selling gas cheaply outside to lure shoppers into the stores. Not surprisingly, customers are happy to buy for a few cents a gallon.

Just as the "mom and pop" hardware stores once complained about Wal Mart competition, now the small independent gas stations of America ague that big chain competition is unfair. The difference is that the gas stations have clout.

Lobbyist Dan Gilligan and others have persuaded 14 states to ban the sale of gasoline below cost. He argues that if big retailers dominate gasoline, consumers will lose.

"Below cost gasoline is rampant in America," said Gilligan, of the Petroleum Marketers Assoc. of America. "If they run out all the other competitors, they will totally be free to exact whatever price they want — I was thinking: this is crazy."

What is crazy, said Stan Sheetz, is what actually happens when those 14 states start policing gasoline.

Sheetz sells discount gas in five states. In Maryland, which has banned below cost sales, he has literally been busted for the crime of cutting prices.

"They come in and say 'yes, you must raise the price of your fuel'," he said. "This is an illustration of how stupid this law is."

Meanwhile back in Clarksville #151; it's over for Ladco. "It's sad, it's the end of the era," said Ladd.

One day, Ladd predicts, customers filling up at the cheapest pumps in town will miss him, more than they now know.