Florida Price-Gouging Claims Likely to Fall Flat

Suppliers, not stations, mostly responsible for hurricane increases

TALLAHASSEE, Fla. -- Most of the 1,500 gasoline price-gouging complaints filed during Hurricane Dennis will amount to nothing, according to a report in Southwest Florida's News-Press. The hikes were real, but they happened further up the supply chain and hours before Florida's anti-gouging laws took effect.

Market reports show crude oil prices jumped above $61 a barrel on July 6, goosed by dread of the damage that Hurricane Dennis, a Category 4 storm, would do to Gulf drilling platforms, refineries and shipping channels, according to the report. "[image-nocss] They will climb the wall of worry, of what-can-go-wrong," said Brian Milne, editor of DTN MarketWire.

Wholesalers at terminals from Florida to Canada didn't wait for the spike to work its way up the supply chain. Within hours, they raised their own prices.

It's typical of the fast-to-rise, slow-to-fall market, said Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association. "They set prices by the SIRF method: speculation, innuendo, rumor and fear."

The timing raised suspicions and prompted investigations by state attorneys general from Louisiana to Florida. "A lot of people misinterpreted the rise ... as them taking advantage of the hurricane, when nothing could be closer to the truth," said John Felmy, chief economist for the American Petroleum Institute.

Nevertheless, some of the highest swings came at the terminal in Pensacola, dead center in Dennis' sites, according to the report. From July 1 to July 6, prices climbed 10 cents.

The sun rose July 7 to find Flint Hills Resources had raised its wholesale rate for premium unleaded more than 15 cents, according to Pensacola terminal prices reported by DTN. Shell added 11 cents to the price of all grades. BP Oil's regular unleaded leapt 13 cents.

Already, one retailer has been cleared of price-gouging allegations, according to a report in the Naples Daily News. The Florida Department of Agriculture had subpoenaed the records of the Amoco Town Market in North Naples after receiving an anonymous complaint that it had raised prices during Hurricane Dennis.

Owner Georges Chami said officials with the Department of Agriculture told him they were satisfied he had not price gouged. We did receive the records we subpoenaed from Amoco Town Market and found that no price gouging had occurred, Terry McElroy, spokesman for the Department of Agriculture, told the newspaper.

However, Chami said his business continues to suffer because of the allegations.

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