ALBANY, N.Y. -- As part of an ongoing investigation of high gasoline prices after Hurricane Katrina, New York Attorney General Eliot Spitzer has announced price gouging lawsuits against three gas stations.
The lawsuits accuse the stations of charging consumers unconscionably excessive prices in the days immediately following Hurricane Katrina last fall. Previously, the AG's office settled related price gouging charges with 15 stations across the state.
"The lawsuits we are filing today continue my office's effort to ensure that [image-nocss] during market disruptions gas pricing decisions are proportionate to increased costs," Spitzer said. "As part of that effort, we continue to believe that the state needs a clearer and stronger statute to deter price gouging and I urge the State Legislature to act on the bill we have proposed."
In a related matter, Spitzer called upon the Federal Trade Commission (FTC) to aggressively pursue its ongoing investigation of gasoline pricing, market manipulation and price gouging. "With regular gasoline selling at $4.14 a gallon at a station in Brooklyn this week, it is essential that the FTC focuses not only on the merit of price gouging statutes that deal with events such as Katrina, but also on the causes behind the dramatic price increases we're experiencing all these months later. While we need federal and state price gouging laws to protect consumers when disaster strikes, we also need to police oil company behavior during periods of unprecedented prices and profits, he said.
The three stations named in latest lawsuits are Penn-Can Truck Stop Mobil, Oswego County; My Service Station Inc., New Rochelle; and Schaghticoke Mobil, Rensselear County.
The lawsuits allege that Penn-Can prior to Katrina charged its customers for regular gasoline an average of 70 cents per gallon more than it paid its supplier for that gasoline. After the Hurricane, the station raised its retail price to $3.40 per gallon, a markup of 89 cents per gallon over what it paid its supplier. This is an increase in the markup of more than 25%. They allege that My Service Center prior to Katrina charged its customers for regular gasoline 67 cents per gallon more than it paid to its supplier. Following Katrina, the station raised its retail price to $3.45 a gallon, a markup of 99 cents per gallon over what it paid its supplier, an increase in the markup of over 48%. And they allege that Schaghticoke Mobil prior to Katrina charged its customers for regular gasoline 83 cents per gallon more than it paid its supplier and that, after the hurricane, the station raised its retail price to $3.60 per gallon, a markup of $1.43 per gallon over what it paid its supplier, an increase in the markup of more than 72%.
Current law prohibits the sale of vital consumer goods at an "unconscionably excessive price" during natural disasters. The law specifically says that a price may be considered excessive if there is a "gross disparity" between the prices charged immediately before and after the emergency, and the disparity is not attributable to higher costs imposed upon the seller. Under current law, "gross disparity" is not defined. The AG has proposed that the law be amended to specify that a markup of 25% or more would constitute price gouging. Also, Spitzer is recommending that penalties under the law be enhanced to allow recovery of three times the gouger's profits.
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