SEATTLE -- Just as legislators in Washington state heard testimony Monday that there was no evidence of gasoline price gouging in the weeks following hurricanes Katrina and Rita, the Pennsylvania attorney general's office was subpoenaing records from major oil companies and local gas stations in its probe of alleged price gouging at the pump.
Meanwhile, lawmakers in various states are looking at ways to regulate gasoline prices, thus making it more obvious when price gouging occurs, particularly in Washington, where consumer advocates and representatives [image-nocss] of independent stations on Monday asked state lawmakers to consider regulating motor fuels in much the same way they regulate electricity.
Several Washington state legislators invited key players in the state's gasoline market to a joint committee hearing in Seattle to address what many believe to be an impending economic crisis that will be brought by surging prices at the pump, according to a report in the Seattle Post-Intelligencer. Lawmakers wanted to know what, if anything, they could do to stave off economic hardship already felt by consumers and major growth industries, such as agriculture and construction.
The chiefs of the state attorney general's consumer protection and antitrust divisions said they could see no basis for them to investigate if any price manipulation was taking place in the market. Moreover, Tina Kondo, senior assistant attorney general for antitrust, testified that she doubted the existence of any conspiracy to raise prices.
Tim Hamilton of the Automotive United Trades Association, the trade group of small station owners, said that if there is any price manipulation, it is by the oil companies at the wholesale level, with a simple supply-and-demand system. Hamilton told the committees that oil refineries were rationing gasoline and diesel by holding back product and exporting it at key times.
Committee members questioned whether an industry dealing in a necessary commodity should be allowed to make hundreds of billions of dollars in profits, especially after recent mergers have dramatically decreased competition. "In dollar amounts, yes, the amount of profits are very high," said Joe Sparano, president of the Western States Petroleum Association. But he added that the rise in prices directly correlates with the rise in the cost of crude oil and insisted that the profit margins, in percentages, in the oil industry are typically lower than the American industrial average.
In Redding, Calif., district attorney Jerry Benito asked Shasta County supervisors to bar businesses from raising prices more than 10% for essential goods and services during an emergency, whether or not the catastrophe occurs locally, according to a report in the Record Searchlight.
The ordinance would apply to gasoline, food items, emergency cleanup, medical supplies, home heating oil, propane, building materials, housing, transportation, freight and storage. The limit on pricing would extend for 30 days from when the state of emergency was declared, or longer if local lawmakers choose to extend it. Violators would face up to a $10,000 fine and/or a year in jail.
Meanwhile in Pennsylvania, attorney general Tom Corbett's investigators have subpoenaed detailed price information from 31 companies, a mix of small station operators and major oil companies that own stations, as part of his office's investigation of alleged price gouging following Hurricane Katrina, according to a report in the Philadelphia Daily News. "We're gathering our information to make a determination if, in fact, there were price-gouging activities as a result of the hurricane," Barbara Petito, spokesperson for Corbett's consumer protection division, told the newspaper.
If Corbett's office thinks consumers were cheated, civil charges could be filed alleging violations of the state consumer protection law. At this point, Petito said, no charges have been filed. The names of businesses receiving the subpoenas were not released.
Among the things the attorney general is checking out:
Whether prices on signs at the station match those on the pumps. Whether clear and conspicuous prices appear at the pumps. Whether the only price quoted turns out to be the cash price, with no indication that there is a higher price for paying on credit.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.