Gas stations don’t like
Ike
Bob
McDonnell
Attorney General of Virginia
Last month, oil
refineries along the Gulf Coast temporarily shut down as a
precaution in advance of Hurricane Ike. The resulting disruption in the flow of
gasoline hit Virginia, where consumers saw prices at the
pump rise dramatically.
More than 2,300 callers called the
consumer protection hotline at the Virginia Department of Agriculture and
Consumer Services to allege price gouging. VDACS responded by deploying 30
experienced inspectors across the Commonwealth to follow-up on those calls as
quickly as possible.
VDACS continues its
investigation of many of the complaints and will review its findings with the
Office of the Attorney General. “We will cooperate fully with the Attorney
General’s Office in the vigorous pursuit of any unscrupulous operators who might
have charged unconscionable prices to consumers following the recent disruption
in the supply of motor fuels caused by Hurricane Ike,” VDACS Commissioner Todd
Haymore pledged.
Under our state’s
price-gouging law, a company can be charged with price gouging if it charges
“unconscionable” prices during a 30-day period after the Governor or President
has declared a state of emergency. The basic test under the statute is whether
the post-disaster price charged by a supplier for a necessary good or service
“grossly exceeds” the price charged for the same or similar product during the
10 days immediately before the disaster. The statute provides a defense for the
retailer, if any increase in its price solely is due to additional costs imposed
by its supplier.
In 2006 our office
brought three cases under Virginia’s Post-Disaster Anti-Price Gouging
Act to protect consumers who were overcharged for gasoline in the days following
Hurricane Katrina. One station in Northern
Virginia more than doubled its prices in a two-day period, from
about $2.84 to $5.90. Another station had hiked its prices by more than 50
percent. We successfully prosecuted these stations, returned money to their
victims, and required them to donate to the American Red Cross Katrina relief
fund.
The law was activated
again last month – even though sky-rocketing gas prices were due to Hurricane
Ike in the Gulf Coast -- because Gov. Tim Kaine already had declared a
state of emergency in the wake of Hurricane Gustav in the Gulf Coast
and Tropical Storm Hanna hitting Virginia. The declaration was renewed and
expanded with the impending arrival of Hurricane
Ike.
When a refining or
distribution line is shut down during a disaster and there is a resulting supply
shortage, it is understandable that normal market forces may require refiners
and others in the chain of distribution to charge somewhat higher
prices. However, consumers must not be taken advantage of by “unconscionable”
price increases during these times.
I support expanding
this law to cover other levels of the supply chain, and not just Virginia retailers who
may be at the mercy of their suppliers. I will work to accomplish this needed
reform when the General Assembly reconvenes in January 2009.
Taking
advantage of Virginians by unfairly increasing the price of necessary items like
gasoline in times of emergency is unacceptable. The Office of the Attorney
General will do everything we can to prevent and prosecute such actions.
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