States Probing Gas Price Hikes

The recent run-up in gasoline prices has caused severe consumer pain and has not escaped the attention of various state attorneys general, who have gotten an earful from constituents.

In New York, Attorney General Eric T. Schneiderman has opened what he calls a “comprehensive review” on the rising cost of gasoline in Western New York. In addition, Schneiderman announced that he has been appointed to a national Oil and Gas Price Fraud Working Group instituted by U.S. Attorney General Eric Holder, joining a team to investigate any abuse of consumers in the pricing of oil and gasoline.

Schneiderman says prices at the pump have led to an increase in consumer complaints to his office and he has directed his staff to compile data on the prices charged by gas retailers, as well as information on the chain of distribution, to determine the cause behind the continued increases. Schneiderman cautioned that there may not be wrongdoing behind the price spikes, but said that if there is, he will take all appropriate action.

“Drivers across Western New York have a right to know how gas prices are determined, and whether they are being taken for ride,” Schneiderman said.

Maryland and DC

Maryland Attorney General Douglas Gansler has also launched an investigation after prices in the suburban Washington, DC area jumped 25 cents a gallon in a day. In the District of Columbia Irvin B. Nathan, the attorney general, said he's also looking into accusations that Capitol Petroleum Group illegally inflated fuel prices.

The company allegedly told its retailers that gasoline prices had to be raised 25 cents a gallon immediately because of Mississippi River flooding.

"It is not clear to us ... how the potential for flooding along the Mississippi River would have significantly increased your gasoline distribution costs," Gansler wrote in a letter to Eli Kimel, the company's CEO.

Kentucky

Kentucky Attorney General Jack Conway has filed a motion for a temporary injunction in Franklin Circuit Court alleging that Marathon Petroleum Company LLC illegally raised the wholesale price of gasoline and other motor fuels in markets across Kentucky during a time of emergency. Conway said his office was alerted to the drastic price increases by consumers.

"I want to thank Kentuckians who called or emailed our office to report the drastic changes in gas prices that reached more than $4 a gallon at the pump in many communities," Conway said. "Gas prices jumped about 30 cents overnight. The tips provided by consumers and retailers helped us bring this action that will hopefully provide some relief for Kentuckians who are struggling to put gas in the car and clean up from flooding."

The motion alleges that Marathon violated Kentucky’s price-gouging statute that was triggered when Gov. Steve Beshear declared a state of emergency on April 26 in the wake of massive flooding.

Conway's motion was filed in the ongoing case against Marathon and its wholly owned subsidiary, Speedway LLC, for alleged price-gouging violations following Hurricanes Katrina and Rita in 2005, asks the court to require Marathon to lower its wholesale prices in all Kentucky markets to no more than the price charged on April 25.

In Washington, U.S. Attorney General Eric Holder formed a working group last month at the request of President Obama, who asked federal and state agencies to examine oil and gas markets for potential wrongdoing. The working group is part of the President’s Financial Fraud Enforcement Task Force, established to investigate and prosecute financial crimes.