By Georgia Fearn, INC
Drivers allege that major fuel retailers used Kalibrate’s AI-powered tool to coordinate higher pump prices across the state.
California drivers are accusing some of the country’s biggest fuel retailers of using software powered by artificial intelligence (opens in new tab) to keep pump prices artificially high.
A proposed class action (opens in new tab) filed Monday in federal court in Sacramento alleges that BP, Circle K, Marathon Petroleum, 7-Eleven, Walmart, Albertsons, EG America, Speedway and TravelCenters of America used Kalibrate’s AI-powered fuel-pricing tool to coordinate prices at the pump.
The complaint does not describe a traditional price-fixing conspiracy, with competitors meeting privately to set numbers. It alleges that a shared pricing platform helped the companies do the coordinating.
According to the complaint, Kalibrate Fuel Pricing used public and nonpublic data from competing gas stations to recommend higher prices, reduce undercutting, and soften competition in local markets. The complaint calls the alleged arrangement an “AI-powered trust,” saying retailers joined a system that allowed prices to rise without any one station having to move first and risk losing customers.
The defendants have not yet filed responses in court.
“We are reviewing the complaint and will respond appropriately to the Court,” a Walmart spokesperson said in a statement to Inc.
BP declined to comment. Inc. has also requested comment from Kalibrate, Circle K, Marathon Petroleum, 7-Eleven, Albertsons, EG America, Speedway and TravelCenters of America.
The lawsuit claims gas prices rose as much as 30 cents per gallon in areas where many stations used Kalibrate’s tool. Each additional penny at the pump costs California drivers about $134 million a year, according to the complaint.
The defendants operate more than 1,700 gas stations in California, Reuters reported (opens in new tab). California already has the highest gas prices in the country, with regular gasoline averaging $5.58 a gallon (opens in new tab)-compared with a national average of $3.93 (opens in new tab).
Kalibrate markets its fuel-pricing software as a way for retailers to set “competitive, profitable prices at speed (opens in new tab).” Its public materials say the platform delivers 8.3 million fuel prices each month, prices more than 25,000 sites, and can produce an average $331 weekly profit increase per site with AI optimization.
The company also says customer data and pricing strategies are segregated, AI models are trained on customer-specific data, and users remain in control of whether to accept or reject pricing recommendations.
That divide is likely to be central to the case: whether the software helped fuel retailers make independent pricing decisions, or whether it became a mechanism for competitors to move in parallel.
The lawsuit is also an early test of California’s new algorithmic-pricing law. Assembly Bill 325, (opens in new tab) which took effect at the start of this year, makes it unlawful to use or distribute a common pricing algorithm as part of an anticompetitive agreement. It also targets efforts to coerce another business into adopting prices recommended by such a tool.
Jamie Court, president of Consumer Watchdog, a California-based consumer advocacy group that has long criticized the state’s gasoline market, called the complaint “very compelling.”
“The sharing of data among competitors makes a case there is a tacit agreement to overcharge consumers that undermines a competitive marketplace,” Court told Inc., adding that the issue may be especially acute in rural areas with fewer competing stations.
But Court said the algorithmic-pricing issue sits on top of a broader California gas-market problem: limited competition among refiners and branded stations. The case may turn on how much nonpublic information was shared and used by the pricing tool, he said.
Jeff Lenard, vice president of media and strategic communications at NACS, a trade group representing convenience and fuel retailers, said retailers are usually not the main force behind changes in gas prices.
“Approximately 90 percent of the price of gasoline is determined by factors before the retailer even gets possession of it, including the cost of crude oil, refining expenses and state and federal taxes,” Lenard told Inc. “While I can’t speak to the specifics here, whenever there are concerns about gas prices it’s almost always determined that the retailer is not the problem.”
Lenard added that local retailers often make smaller margins when gas prices rise, while facing higher costs, including credit card fees.
The same risk extends beyond fuel. Restaurants, hotels, retailers, delivery platforms, and e-commerce sellers increasingly use software to adjust prices based on demand, inventory, costs, and local competition.
For small operators, those tools can mean faster decisions and better margins. They can also create new exposure if a vendor serves competitors in the same market or uses competitor data to shape recommendations.
Algorithmic pricing is already under pressure in housing. The Justice Department sued RealPage (opens in new tab) in 2024, alleging that its rent-pricing software helped landlords coordinate rents by using competitors’ sensitive data. Now a similar theory is being aimed at gas stations, where prices are posted in giant numbers on the side of the road.
The California drivers still have to prove their claims.
