Archive for Saturday, September 3, 2005

Kline warns gas stations about price gouging

September 3, 2005


Kansas Atty. Gen. Phill Kline on Friday warned gasoline station operators that complaints of price gouging will be aggressively investigated.

But Lawrence resident Dale Miller said he thought Kline would have a difficult time apprehending the people truly responsible for any gouging at the pumps.

"You might want to talk to Saudi Arabia about that," said Miller, a retired gas station owner. "Believe me, it's not the retailer that's gouging anyone."

History, though, has proven that has not always been true. After the Sept. 11 terrorist attacks, 140 gas stations in the state ultimately agreed to a settlement related to price gouging. Gasoline retailers and wholesalers, however, said that shouldn't happen now.

"I don't believe we'll see any of it this time," said Kyle McNorton, general manager of Topeka-based Capital City Oil, a gasoline wholesaler and retailer. "On Sept. 11, there were some people who pushed the panic button. A lot of times they weren't knowingly gouging, but it happened, and it didn't need to. I think people have learned from that."

Jan Lunsford, a spokesman in Kline's office, said that calls to the consumer protection division of the attorney general's office had increased "enormously" regarding complaints about gasoline prices. But, Lunsford said, there wasn't any evidence that price gouging was occurring.

Lunsford said the office used a general rule of thumb, upheld by courts, that gouging began when prices were more than 2.5 times their previous levels. Gasoline prices before Hurricane Katrina were about $2.60 per gallon, meaning prices would need to be more than $6 a gallon before gouging was suspected.

Republican Sen. Derek Schmidt said he believed the attorney general's office was using too lax a standard. He successfully introduced legislation after the 9-11 attacks that established a price increase of more than 25 percent after a natural disaster was evidence of profiteering.

"I think perhaps they might want to look at the new statute," Schmidt said.

But Schmidt said it was still possible that gasoline stations that have had an increase of more than 25 percent since the hurricane struck were not gouging. He said the law did allow retailers to pass along price increases they have had to absorb.

Patrol seeks deals

The Journal-World found gas prices as low as $3.05 at several stations around town. If you find a lower price, call Pump Patrol at 832-7154.

McNorton said he thought the price increases after Hurricane Katrina were legitimate. He said prices on the futures market had risen and that wholesalers and retailers were simply responding to an increase in the price they paid suppliers.

McNorton said good business practices dictated that the station always charged enough to replace what gasoline had been sold, which can lead to sudden increases in prices at the pump.

Kline met with members of the state's petroleum industry on Thursday. He told the group that the attorney general's office had the ability to prosecute price-gouging activities. In 2001, the state reached agreements with 140 stations that were charging more than $2.49 per gallon for gasoline immediately after the Sept. 11 attacks. The stations each agreed to pay $250 in fines and make a $750 donation to a Sept. 11 relief fund.

Report it

People who feel they have been the victim of price gouging at the gasoline pump should call the Kansas Attorney General's Consumer Protection Division at (800) 432-2310.

On a brighter side, though, Miller and McNorton said they did not believe gas shortages caused by damaged pipelines were likely in this area. Miller said much of the oil and gasoline coming through New Orleans served the eastern part of the country.

McNorton said a significant amount of gasoline and oil used by Kansas consumers came from the Galveston, Texas, area. But he said some gasoline that normally would be destined for Kansas was being diverted to other parts of the country that otherwise wouldn't have any gasoline at all.

"The supply has been disrupted some, but it is not at a critical point," McNorton said. "As long as people don't begin going out and filling up all their storage tanks and hoarding, we'll be fine."

McNorton said small, independent stations not affiliated with a particular brand would be the most likely to face serious shortages.


Skeptic 12 years, 7 months ago

"As long as people don't begin going out and filling up all their storage tanks and hoarding, we'll be fine.""

this is EXACTLY what "gouging" prevents. It's a way of making sure that if you really need gas, and are willing to pay for it, it will at least be available for purchase.

It's so sad that when the nature incentives toward conservation of fossil fuels come into play, the retailers get threatened by the AG.

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