Question of the Month
November
2005
Are
there state or federal laws in place to specifically investigate and
penalize cases of gouging on the price of gas?
Over half the U.S. states have
"anti-gouging" laws, with some specific to gasoline and
others applying to consumer services in general.
At the federal level, there is no
specific law against gas gouging except as it may relate to violations
of antitrust statutes. Most states’ anti-gouging laws are triggered
by a declaration of emergency or disaster from the governor or the
president of the United States.
In Indiana, which passed
legislation in 2002, gouging is defined as pricing that grossly
exceeds the average cost at which gasoline was available during the
seven days preceding an emergency declaration. In addition, this
increase must not be attributable to higher costs incurred by the
retailer. The Indiana attorney general is responsible for
investigating cases of gas gouging. If found guilty, a retailer faces
a civil penalty of up to $1,000 per transaction.
Gouging the price of gasoline in Michigan
can result in fines of up to $25,000. That state’s Consumer
Protection Act prohibits a retailer from charging a price that is
"grossly excessive," which is determined by comparing
wholesale and retail fuel costs.
While some states do not have laws
specific to gas gouging, most have some way of triggering
investigations into such actions. For example, Kansas’
Consumer Protection Act protects citizens from any
"unconscionable act or practice" — language that includes,
but is not specific to, fuel sales.
In Illinois, the attorney
general is authorized to enforce the state’s Consumer Fraud and
Deceptive Businesses Practices Act and promulgate rules. On Sept. 2,
Lisa Madigan used her statutory authority to investigate whether
sudden spikes in gasoline prices were market driven. She also
prohibited the selling of any petroleum product at an
"unconscionably high price" after a market emergency.
On Sept. 1, attorneys general from
Illinois, Iowa, Michigan, Missouri and Wisconsin jointly
requested that the Federal Trade Commission investigate whether
gouging on the price of gas was occurring in the wake of Hurricane
Katrina. These states and others also began working together to look
into possible violations. On Oct. 10, as part of the investigation in
her state, Wisconsin Attorney General Peg Lautenschlager demanded that
13 oil companies provide her office with "all documentation
related to the purchase of fuel from suppliers, the distribution and
delivery of fuel to retail stores, and the retail purchase of fuel as
it relates to consumers in Wisconsin."
For
more information on this or any other public policy issue, please call
630-925-1922 or complete the online
form for research services.
Return
to Question of the Month
For more information, contact:
CSG Midwest
