In a report issued to the public, the AG's Office said retailers' price markups following Hurricane Ike in 2008 were not as dramatic as they were after Hurricane Katrina in 2005. [image-nocss] McMaster said this indicates the state price gouging law enacted in 2006 had a deterrent effect. The report also said that the September 2008 spike in prices was primarily due to a lack of supply, causing a scramble for gasoline by suppliers, wholesalers and retailers.
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McMaster also announced that settlements were reached with three gasoline retailers and one wholesale supplier as a result of the gasoline price gouging investigation. As part of the settlements, they agreed to donate a total of $6,500 to the American Red Cross for hurricane relief.
Settlements were reached with Bobb's Food & Fuel, Lexington (donation: $500); Best Stop, West Columbia (donation: $500); CITGO, Clinton (donation: $500); Transmontaigne (wholesale supplier, a wholly owned subsidiary of Morgan Stanley Capital Group Inc.), Spartanburg (donation: $5,000).
On Sept. 12, 2008, McMaster activated the state's price gouging law in the wake of Hurricane Gustav and just prior to Hurricane Ike making landfall on the Gulf Coast. In the weeks following landfall, the AG's Office received approximately 4,360 complaints about suspected gasoline price gouging.
As a result of these complaints, the AG's Office issued investigative demands to 30 retail stations, four wholesalers and three suppliers from September 2008 through February 2009. During the investigation, meetings and interviews were held with suppliers, wholesalers and retailers across the state.
In the fall of 2005, McMaster launched an investigation into gasoline price gouging in the wake of Hurricane Katrina, resulting in four stations settling with the office. McMaster also successfully lobbied the General Assembly in 2006 to strengthen the state's price gouging laws, allowing the attorney general to activate criminal penalties for price gouging during a period of abnormal market disruption affecting South Carolina.
"It became clear during the investigation that the state's new price gouging law had a deterrent effect," said McMaster. "While our neighbor states took action against a high number of retailers, Palmetto State retailers were aware of the state's new price gouging laws and acted in good faith."
He added, "While the dire shortage set off a mad scramble for gas, station owners in South Carolina were able to justify and document their price increases as a response to the supply and demand effect of market forces."
Documents showed that in 2008, the retailers' price markups following Hurricane Ike were dramatically lower than following Hurricane Katrina in 2005. The largest 2008 documented price markup of 11.8% did not come close to the 40% and 46% markups uncovered in the 2005 price gouging investigation.
"To put it in perspective, a station would have had to charge $7.57 per gallon in 2008 to match the highest-priced stations in 2005," said McMaster.
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