MONTGOMERY, Ala. -- Alabama Attorney General Troy King yesterday filed the first lawsuits arising from his ongoing inquiry into the dramatic rise in gasoline prices associated with Hurricane Katrina.
The AG filed civil complaints charging four gas stations with numerous counts of price gouging. These lawsuits stem from an initial round of subpoenas served on gas stations by King in mid-September.
Accused of multiple violations of the Alabama Unconscionable Pricing Act are: Stop N Go Express, Montgomery; Cannon Kwik Stop, Montgomery; [image-nocss] Cannon Oil Co., Monroeville; and Bud's #13, Decatur.
King's complaints were filed this morning in the Circuit Courts of Montgomery, Monroe and Morgan counties.
An official state of emergency was declared by Governor Bob Riley on Aug. 28, 2005, as Alabama, Mississippi and Florida faced the destruction of Katrina. Thousands of residents of Mississippi and Louisiana fled in search of shelter, and as of Oct. 24, 2005, more than 22,000 of those evacuated people remained in Alabama. These evacuees, as well as Alabama residents and emergency workers, purchased goods, services and supplies, including petroleum products, in the state.
The Alabama Unconscionable Pricing Law, enacted to provide protection during such times of crisis, prohibits abusive or "unconscionable" price increases during an official state of emergency. A price that is 25% or more than the average price charged in the same area within the last 30 daysunless the increase can be attributed to a reasonable costis a prima facie case of unconscionable pricing. The penalty is a fine of up to $1,000 per violation, and those determined to have willfully and continuously violated this law may be prohibited from doing business in Alabama.
King claimed in the lawsuits how the evidence his office has gathered indicated that these stations committed multiple violations of price gouging.
Investigators and attorneys reviewed information subpoenaed by the AG, including documentation of how much the stations paid for the gasoline prior to and after the declaration of the state of emergency and how much the stations charged consumers for the gasoline prior to and after the declaration of the state of emergency.
King compared the prices the stations charged consumers for gasoline after the declared state of emergency with the prices the stations and other stations in the affected area charged consumers for gasoline before the declared state of emergency, and also took into account any increased costs for the stations. All four of the stations charged raised their price for gasoline above 25% of the average price for the 30 days immediately prior to the declared state of emergency, he alleged.
And because the gasoline came from an already existing supply that the stations had previously purchased, the increase in prices they charged to consumers was not attributable to an increase in the costs of the gasoline in question, he added.
According to King, Bud's #13 raised its price of regular unleaded gasoline to $3.199 per gallon (70 cents per gallon increase) on Sept. 4 and 5, 2005, even though it had not received a delivery of regular unleaded gasoline since Aug. 27, 2005. Bud's also increased its midgrade and premium-grade prices by 70 cents per gallon on September 4 and 5, without having received additional deliveries.
Cannon Kwik Stop allegedly raised its price of regular unleaded gasoline to $3.299 per gallon (83 cents per gallon increase) on Sept. 1, 2005, even though it had not received a delivery of regular gasoline since Aug. 25, 2005. It also increased midgrade and premium prices by 83 cents per gallon on September 1; by 92 cents per gallon on September 2-5; and by 73 cents per gallon (83 cents for premium) on September 6-7 without having received additional deliveries.
King said Cannon Oil raised its price of midgrade unleaded gasoline to $3.529 per gallon (86 cents per gallon increase) on September 2-5 even though it had not received a delivery of mid-grade unleaded gasoline since Aug. 28, 2005. Cannon Oil also increased its premium-grade gasoline price by 86 cents per gallon on September 2-5 without having received additional deliveries.
Stop N Go Express allegedly raised its price of regular unleaded gasoline to $3.099 per gallon (62 cents per gallon increase) on September 1, even though Stop N Go Express had not received a delivery of regular unleaded gasoline since Aug. 22, 2005. Stop N Go Express also increased its midgrade unleaded gasoline price by 62 cents per gallon on September 1 without having received an additional delivery.
In response to these price increases during a state of emergency, King initiated a September 1 conference call among AGs nationwide, which resulted in a multi-state inquiry by 45 AGs into the drastic rise of gasoline prices. On September 13, King announced that his office was serving an initial round of subpoenas on 22 stations, which represented those about which his office had received the greatest number of complaints from consumers.
Of the 21 subpoenas served (one station was out of business), King has determined that 17 of the stations are independently owned, and of these, four stations engaged in price gouging. The AG's Office is working to obtain more complete information from five of the other independent stations subpoenaed in this first round. From the information obtained by subpoena, the AG did not find evidence of price gouging from the remaining eight independent stations. The remaining stations that were served subpoenas in the first round are not independently owned and the data from those stations is being reviewed along with information obtained from subsequent subpoenas.
The subpoenas were the first part in King's investigation into complaints of price gouging. He also issued subpoenas on gasoline distributors and producers, and his office is currently analyzing the information received through those subpoenas.
"We do not announce today the conclusion of this investigation," he said. "Instead, we will continue to investigate and, as necessary, to file additional suits to hold those who unconscionably gouged gasoline pricesbe it the local retailers or the distributors or the producersto account."
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