WASHINGTON -- Charges of gasoline price gouging quickly followed in the wake of Hurricane Ike. Attorneys general in several states issued warnings intended to protect consumers and to caution fuel retailers. AGs in Florida and North Carolina issued subpoenas to retailers, and President Bush even got into the act.
President Bush warned Monday that people will face a "pinch" because of Ike's disruption of energy production, as many consumers already grappling with the high price of gasoline have seen costs soar since the storm made landfall, said the Associated Press. He also implied that [image-nocss] gasoline retailers could be gouging motorists, raising the ire of the Petroleum Marketers Association of America (PMAA), which responded with a letter to the one-time oilman.
Bush said the hurricane's toll on refineries and pipelines is creating "an upward pressure on price" for people at the gasoline pump. "There's going to be a pinch," Bush said after a briefing on hurricane recovery efforts. "I wish it wasn't the case, but it is. On the other hand, if the pinch is too hard, if people think they're being treated unfairly, they need to get on the Department of Energy website…or the [Federal Trade Commission's] website…and make their complaints known."
On Monday, a gallon of regular unleaded gasoline rose half a penny overnight to a national average of $3.842—up 16.7 cents from Friday, according to auto club AAA, the Oil Price Information Service and Wright Express. Since the storm, prices have jumped above $5 per gallon in parts of the country, with huge disparities within some states and even some neighborhoods, according to AP.
Click herefor a complete transcript of President Bush's comments.
PMAA said in its most recent Regulatory Update that association president Dan Gilligan sent a letter to President Bush expressing disappointment with the President 's comments. “It may appear to the average consumer that the retailer is gouging when in fact the only choice is to dramatically raise prices or turn off the pumps,” the letter said.Click here to view the letter.
Meanwhile, Florida Governor Charlie Crist warned gasoline retailer on Saturday about price gouging in the wake of Hurricane Ike as some stations increased prices to more than $4 a gallon, reported The Tampa Tribune. And Florida attorney general Bill McCollum on Sunday announced a series of subpoenas to four companies, seeking information about reported increases in the price of gasoline. A similar situation also played out in North Carolina, where that state's AG issued subpoenas to seven stations.
"There's plenty of fuel in Florida," Crist said. He encouraged the public to report stations where prices had risen dramatically. Gas prices and supplies fluctuated greatly Saturday.
Crist urged motorists not to panic-buy gasoline, creating an artificial shortage. "We have no shortage. We have no problem. So let's not create one," he said.
AAA South spokesperson Randy Bly agreed with Crist that plenty of gasoline was available, but the cost and distribution of the supply can create wide pricing differences and spot outages. "The problem is a stretching thin on the overall gas supply right now," he told the newspaper. That is compounded when people begin to stockpile gasoline in anticipation of shortages or price increases, he added.
He said the problem began Thursday, when wholesale gas prices in Florida increased to $4.89 a gallon. Stations had to decide between buying that gasoline and hiking prices—still selling it below their cost—or letting their supplies run out and waiting for prices to drop.
"Many dealers are not willing to pass that huge of an increase on to consumers," Bly said. "They don't want to be accused of gouging or have the headache of people screaming at them."
Bly told the paper that 80% of Florida's gasoline comes from Louisiana refineries, rather than the Texas refineries shut down by Ike. While the Louisiana refineries continued to operate, barges could not get out of port until the hurricane passed. He said many should now be on their way. Gas prices could remain higher as vendors try to recoup some of their losses, he added.
In Tallahassee, Bly said, prices were topping $5 a gallon in some places, while in Georgia and Tennessee prices jumped 20% or more. He called the increases "an annoyance and inconvenience." He added, "I heard a report in Arkansas that gas was $8 a gallon. Now that's price gouging.
McCollum issued a series of subpoenas to four companies, seeking information about reported increases in the price of gasoline throughout the state. The subpoenas requested documentation from Flying J, Dodge's Gas Stores, Valero and Pilot Travel Centers detailing the purchase prices the companies paid for gasoline sold at their Florida retail locations. The AG issued the subpoenas after receiving more than 350 complaints about gasoline price gouging over a four-day period.
Consumer complaints against these stations have been particularly high in several areas of the state, including the Tampa region, South Florida, Central Florida and Tallahassee and the Panhandle, McCallum indicated. Service of the subpoenas began Monday and the AG has requested the sought-after materials be provided within a week.
According to Florida law, price gouging on essential commodities, including gasoline, is prohibited during a declared state of emergency. The state of emergency for Ike was issued by the governor on September 5. Price gouging is an unjustified increase in the price of a commodity compared to the average price for the 30 days prior to the declaration of a state of emergency. The statute does permit businesses to pass along cost increases to consumers if those increases can be justified due to higher purchase prices.
And in North Carolina, Governor Mike Easley on Friday said, "As a result of Hurricanes Gustav and Ike, oil refineries in Texas and Louisiana have temporarily interrupted some gasoline supplies to the pipelines that serve North Carolina; therefore, there may be temporary limitations on our gas supply. However, wholesale gas prices are up less than 20 cents a gallon over the last few days; therefore, consumers should not see prices rise substantially more than this rise in the wholesale price. Today, I have declared a state of abnormal market disruption under North Carolina law and charged the attorney general with enforcing the price gouging statute. This statute prohibits the charging of prices that are unreasonably excessive under the circumstances. We know that there will be some supply disruption, but we do not yet know the extent. Past events of this kind have lasted only a short time. I urge motorists to reasonably conserve gasoline until the situation is clearer."
North Carolina attorney general Roy Cooper issued subpoenas Monday to several stations, not named in the press statement, that allegedly charged consumers $5.49 or more a gallon for gasoline. Cooper 's Consumer Protection Division issued the subpoenas after getting more than 2,800 reports of possible price gouging from consumers across the state.
The subpoenas were being served on stations in Anson, Ashe, Cherokee, Guilford, Montgomery, Stanley and Transylvania counties. AP reported that the stations were the Grand Central Expressin High Point ; Quik Chek outlets in Troy, Oakboro and Locust; the Corner Market in Jefferson; Mike's Community Mart & Car Wash in West Jefferson; Big D Convenience Food Store in Murphy; Jarrett's in Rosman; C's in Mount Gilead, and Whit's Convenience Store outlets in Lilesville and West Polkton.
The subpoenas require retailers to provide documentation to the AG's office by September 26 including information on their costs.
Cooper said that he expected to issue additional subpoenas to more stations later this week.
See the related stories in this issue of CSP Daily News, including the most recent Lundberg column.
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