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State Grabs Oil Company, Gas Station Data in Gouging Probe

Posted on: Tuesday, 4 October 2005, 21:00 CDT

By Ramona Smith, Philadelphia Daily News

Oct. 4--The Pennsylvania attorney general's office is subpoenaing records from major oil companies and local gas stations in its probe of alleged price gouging at the pump.

More than 1,500 people -- most from the Philadelphia area -- have complained to the state since gas prices jumped out of control in the wake of Hurricane Katrina.

Now Attorney General Tom Corbett's investigators have subpoenaed detailed price information from 31 companies -- a mix of small gas station operators and big oil companies that own stations -- including 13 in the five-county southeastern Pennsylvania region.

"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, spokeswoman for Corbett's consumer protection division, said yesterday.

If the A.G.'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.

"We're certainly glad to see them taking action," said Cathy Rossi, spokeswoman for AAA Mid-Alantic, which tracks gasoline prices. "There have been questions about how slowly gas prices in the Mid-Atlantic region have fallen," she said, compared with those for the nation as a whole.

Meanwhile, the A.G.'s office has spot-checked prices at more than 600 gas stations, mostly in the Philadelphia area. Among items checked 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's a higher price for paying on credit.

All those issues were cited in complaints received since the end of August by Corbett's office. But the most common complaint, Petito said, was that prices were lurching upward two or three times in a day.

Pennsylvania has no law barring more than once-a-day price increases, but since many customers take that as a sign of gouging, Corbett's office is also pursuing those complaints.

When the A.G.'s office decides to subpoena records, it seeks information on the rate the station pays for wholesale gas, other costs faced by the retailer, the price it charges customers, its profit margin and what price competitors were charging, Petito said. Based on that information, the state would decide whether to file a case.

Under Pennsylvania's consumer protection law, violators can be fined $1,000 per violation. But there's a problem.

The law sets no specific threshhold at which a price increase is considered to be gouging.

Instead, the law forbids "unconscionable" prices, which means "the price has to shock one's conscience," Petito said. But that can mean different things to different judges.

A bill that recently passed the state Senate would set a definite threshold for gouging when a vendor raises prices 20 percent or more beyond the increases charged by its own suppliers.

The bill, pending in the state House, also would toughen penalties to $10,000 per violation. It would apply only during an emergency, such as that declared by Gov. Rendell after Hurricane Katrina.

Gas prices peaked at an average of $3.36 a gallon in the five-county Philadelphia region, and at $3.22 throughout Pennsylvania, both on Sept. 7, and at $3.06 nationally on Sept. 5 for regular unleaded, according to AAA Mid-Atlantic.

The average price dipped below $3 in the Philly area on Sept. 23 and hasn't gone back. Local prices yesterday averaged $2.94 -- $1.01 more than a year ago.

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Source: The Philadelphia Daily News

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