ATTORNEY GENERAL TO INVESTIGATE SKYROCKETING PUMP COSTS
The Daily News of Los Angeles
With steep spikes at the pump in the past week and $3 gasoline a common sight in Los Angeles, California Attorney General Bill Lockyer on Friday launched an investigation into possible price gouging by oil companies.
“The attorney general hopes he finds that they’ve not come down with a severe case of greed after Hurricane Katrina,” said Lockyer spokesman Tom Dresslar. “The investigation will determine whether price increases can be explained by market prices. In some cases, when you see stations go up 10 cents in a day, or two or three times in a day, legitimate questions are raised by those kinds of jumps.”
Both Lockyer and the California Energy Commission, at the behest of Gov. Arnold Schwarzenegger, are now taking consumer complaints to see if gasoline retailers have hiked prices beyond what the market dictates.
His office will take consumer comments via e-mail at [email protected], while the California Energy Commission asked for drivers to visit its Web site, http://www.energy.ca.gov to submit their concerns.
The average price of a gallon of regular gasoline in Los Angeles has increased more than 12 cents since the beginning of the week to $2.92 on Friday, according to the Automobile Club of Southern California.
But some stations have shown increases double that.
Because President George W. Bush declared a state of emergency in Louisiana on Aug. 27, Lockyer intends to use a broad interpretation of the California Penal Code barring gasoline price increases of more than 10 percent in a 30-day period.
Dresslar said that in cases in which service stations’ costs are dictated by suppliers, the probe would likely extend to the oil companies themselves.
In addition, it will gather information to see whether the oil industry has violated unfair business-practice statutes or anti-trust laws.
“Every time there’s market volatility, someone calls for an investigation,” said Anita Mangels, a spokeswoman for the Western States Petroleum Association, the refineries’ trade group. “Every time, the results are the same: Price volatility is determined by market factors, not business practices by the petroleum industry.”
Mirroring the concern of state officials, Sen. Barbara Boxer, D-Calif., on Friday asked the Federal Trade Commission to carefully monitor gasoline prices in the wake of the hurricane.
The Santa Monica-based watchdog group Foundation for Taxpayer and Consumer Rights cheered Lockyer’s efforts on Friday. The nonprofit group has long complained that oil companies have enjoyed record profits on the back of consumers, and used the post-hurricane period to highlight its attack on the industry.
“The oil companies have rigged the system to always be operating in disaster mode,” said Jamie Court, FTCR’s president. “When a real disaster hits, the public can see that is what’s really happening. They’re doing it because they can. The problem is, the station owner is caught in the middle. This investigation has to be on the oil companies’ roles in setting the price for the dealers.”
Rashmi Patel, who owns a pair of Arco stations in North Hollywood, said his prices have gone from $2.79 Monday to $2.91 Friday, each price dictated daily by BP PLC, the oil giant that supplies him. He makes between 6 and 8 cents per gallon, grossing most of his money from convenience store sales rather than fuel.
“Nobody’s gouging, I can say that. Whatever the oil company tells us, we put it up,” said Patel, who’s been in the business 17 years. “We get a fax in the afternoon and it says our price is going up 4 or 5 cents for the delivery. I get deliveries almost every day, and every day the price goes up, 2 cents here, 3 cents there, 6 cents.”
Contact the author Brent Hopkins at: (818) 713-3738 or [email protected]