Gas Stations Don't Like Ike
By Bob McDonnellLast 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.
In the future, if you suspect price gouging is occurring during a time of disaster, please file a complaint with the Office of Consumer Affairs by calling them at 804-786-2042 or toll-free at 1-800-552-9963. Or you can download a complaint form by visiting:
http://www.vdacs.virginia.gov/forms-pdf/cp/oca/complaint/pricegouging.pdf.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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