KNOXVILLE, Tenn. -- Knoxville, Tenn., convenience store operator Bill Weigel has one question for state Attorney General Bob Cooper: "How can we gouge customers if we had no gas?" Weigel Stores Inc., which is one of 17 companies and individuals owning 34 gas stations in East and Middle Tennessee accused by Cooper of illegally increasing fuel prices last fall during a hurricane-related gasoline shortage (click here for previous CSP Daily News coverage), has decided to fight the allegations in court. The state says Weigel Stores violated the Price Gouging Act of 2002 and the Tennessee Consumer Protection Act, reported The Knoxville News Sentinel.
The 16 other companies, including Pilot Corp. and Pilot Travel Centers of Knoxville (see related story in this issue of CSP Daily News), Rocky Top Markets, Kingston and Git 'N Go Inc., Clinton, agreed to pay civil penalties totaling $40,000 and restitution to consumers of more than $73,400. As part of the settlement agreement, the companies deny any wrongdoing and maintain that they settled to avoid the time and expense of litigation, said the report.
The defendants who settled advertised and sold regular unleaded gasoline at prices ranging from $4.69 to $5.98 per gallon, according to the AG.
The state claims that seven Weigel's stores engaged in gouging in the days following Hurricane Ike last September as Tennessee and other Southeast states were hit with severe fuel shortages. The curtailed fuel shipments arose when Ike knocked out Gulf Coast oil refineries and disrupted pipeline supplies into Knoxville.
The AG's investigation began last fall after consumers complained that some stations unfairly raised gasoline prices after hurricanes Gustav and Ike battered the Gulf refineries.
Weigel said his company fully cooperated with the state investigation, and he does not understand how it can be accused of gouging when it had little or no gasoline to sell at that time. "While settling would have cost a lot less than fighting the Attorney General's lawsuit, we did not overcharge our customers, and we are not going to sign a settlement agreement that implies that we mistreated our customers," Weigel told the newspaper.
In its lawsuit against Weigel Stores filed last Thursday in Knox County Chancery Court, the state accuses the longtime Powell, Tenn., convenience store operator of advertising gasoline at the locations in question from $4.50 to $5.20 a gallon, depending on the grade of fuel, although it paid between $3.20 and $4.25 a gallon. The state is seeking a ruling that Weigel's violated state law, plus fines and restitution, the report said.
Weigel said his Knoxville-area chain struggled to maintain supplies following Gustav and Ike and attempted to buy gasoline from any source at "greatly increased" prices to keep customers supplied. "We lost over a million gallons in sales, and our profits plummeted, but the Attorney General claims we were charging too much," he told the paper, adding that the company ran out of gasoline at most locations despite the efforts. "We will never treat our customers unfairly, and we are not going to admit to something we did not do."
In a statement, Pilot said the state investigation showed the company sold gasoline below its actual cost almost 50% of the time last fall during the time in question, said the report; however, the company said four locations' prices were inadvertently increased before shipments of higher-priced fuel were delivered.
"At no time did Pilot's retail price for unleaded gasoline ever exceed $4.99," the company said. "As a result, Pilot agreed on a settlement with the Attorney General's Office to ensure that customers affected at these four locations over the three-day period would receive a refund for the amount paid that was above an agreed retail price."
Pilot said it has put in place a new software program that will ensure complete compliance with state pricing laws.
Git N' Go president Carol Wilshire told the paper that she was "extremely disappointed" that the attorney general's office made the "unfounded accusations" against the Clinton-based small business.
Rocky Top Markets chief executive Steve Kirkham agreed that it was cheaper for his company to agree to the settlement rather than fight charges of which it is not guilty. He told the News Sentinel that customer gasoline purchases were restricted during the period to ensure that all customers would have fuel, and that one Rocky Top Market was closed to redirect the gasoline to necessary government operations such as police and fire departments.
"I think it is totally unfair. I don't think we're guilty of anything," Kirkham told the paper.
As part of the settlement, according to the report, the retail fuel centers will make restitution directly to consumers who submit a valid claim and will pay civil penalties and costs to the state.
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