The Car and Truck Fleet and Leasing Management Magazine

15 N.Y. Gas Stations Fined for Price Gouging

December 22, 2005

ALBANY, N.Y. --- New York Attorney General Eliot Spitzer on Dec. 19 announced that 15 gas stations have agreed to pay fines totaling $63,500 as a result of a state probe into suspected gasoline price gouging after Hurricane Katrina. The three-month probe included careful analysis of gas station records and other evidence showing that certain stations used the disaster as an excuse to raise prices well beyond what was warranted by market factors, Spitzer said. The investigation is continuing into other retailers, distributors and wholesalers. “No one begrudges a business the right to make a profit and under normal circumstances business owners may charge whatever price they think is appropriate,” Spitzer said. “But when disaster strikes, state law requires that price increases be linked directly and proportionately to increased costs. This investigation has found numerous instances of unwarranted price increases. In fact, many retailers appear to have used the disaster as an excuse to gouge customers.” As part of the investigation, Spitzer’s office obtained invoices and other records from 80 stations where consumers filed complaints about record surges in gas prices after Hurricane Katrina struck in late August. Deputy Attorney General Martin Mack led the investigation. Out of the 80 stations analyzed, 15 emerged as having increased their markups most significantly. In fact, these 15 stations all increased their markup on the gas by 25 percent or more after the storm. One station in Westchester County tripled its markup as it raised its price from $2.69 to $4 per gallon of unleaded regular gas. In a related matter, Spitzer called for strengthening the state’s price gouging statute to help deter similar problems in the future. Current law prohibits the sale of vital consumer goods at an “unconscionably excessive price” during natural disasters. Spitzer is proposing that the law be amended to specify that an increased markup of 25 percent or more would constitute a presumption of price gouging. In addition, he is recommending that penalties under the state law be increased to $500 per violation plus three times the gouger’s profits. “Current law does not provide a strong enough deterrent to price gouging,” Spitzer said.
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