Retailers Face Gouging Lawsuits Post-Hurricane

Complaints allege prices as high as $9.99 per gallon

AUSTIN, Texas -- The first lawsuits have been filed against gasoline retailers over alleged hurricane-related price gouging.

After receiving more than 3,300 price-gouging complaints related to Hurricane Harvey, Texas Attorney General Ken Paxton has filed lawsuits against two fuel retailers. Texas law forbids businesses from charging exorbitant prices for necessities such as gasoline during a declared disaster.

One of the retailers charged is Bains Brothers LLC, Dallas, which owns three Texaco-branded sites in the Dallas-Fort Worth area. According to the attorney general’s lawsuit, the retailer was selling regular-grade gasoline for $2.29 per gallon on Aug. 30, 2017, five days after Hurricane Harvey’s landfall. Within less than 24 hours, two of Bains Brothers’ stations allegedly raised their price for regular to $6.99 per gallon. 

The fuel price increased so quickly that the retailer is said to have removed the numbers from one side of the price sign, leaving the other side with a price much lower than what was being charged at the pump, according to the complaint. One customer saw an advertised price of $3.29 per gallon but was allegedly charged $6.99 per gallon at the pump. Another customer alleged that the fuel price increased 40 cents per gallon during the fill-up.

The second fuel retailer being sued is Encinal Fuel LLC, which owns a Chevron-branded site in Encinal, Texas, outside of Laredo. According to the attorney general’s lawsuit, the retailer allegedly charged $8.99 and $9.99 per gallon for regular-grade gasoline on Aug. 31, six days after Harvey’s landfall.

Defendants found guilty of price gouging face civil penalties up to $20,000 per violation, with extra fines up to $250,000 for incidents involving a consumer who is 65 years or older.

Meanwhile in Florida, the office of Attorney General Kim Bondi has received more than 10,000 complaints about price gouging after Hurricane Irma, for everything from fuel to ice and lodging, the Orlando Sentinel reported. According to Florida law, it is illegal for retailers to raise prices during a state of emergency to increase profits. They can, however, raise prices if their wholesale costs increase.

Gouge Watch

Separately, New York Sen. Chuck Schumer has asked the Federal Trade Commission (FTC) to create a “gouge watch” to ensure gasoline prices fall as quickly as they rise during disruptive weather events.

“In terms of this nation’s supply and demand for gasoline, hurricanes Harvey and Irma were short-term disruptions that really shouldn’t have a long-term impact on prices at the pump,” said Schumer in a statement. “Gas prices should come back down to earth just as fast as they went up, but right now, my worry is they will not fall as fast as they should. That is why I am asking the FTC to launch a ‘gouge watch’ with oil producers, transporters and refiners alike.”

In his request to the FTC, Schumer observed that gas prices in New York rose quickly before and during Harvey and Irma but had the potential to be “sticky,” or fall very slowly, afterward.

“The only thing that makes a devastating natural disaster worse is the idea that big oil could be making a buck off of the mess and hosing consumers, even after the storm has passed us by and the recovery has begun,” Schumer said. While he noted that the FTC’s powers to control price gouging are limited, he argued the agency could put the petroleum industry “on notice” by issuing a gouge watch.

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