Thousands complain to feds on gas gouging

updated 11:22 a.m. ET Sept. 2, 2005

WASHINGTON - Lawmakers are demanding an investigation into gasoline prices after thousands of motorists called a government hotline to complain of price gouging.

The Energy Department reported more than 5,000 calls to its price gouging hotline Thursday from around the country, although officials emphasized there was no way to immediately determine how many of the allegations were valid.

"In Illinois, prices are reported to have shot up 50 cents per gallon overnight and the state attorney general received more than 500 reports of price gouging," nine Democratic members of the House Judiciary Committee wrote the Federal Trade Commission, asking the agency to step up its review of gas markets.

"These increases go far beyond anything justified or relating to the market disruptions caused by Hurricane Katrina," wrote Rep. John Conyers of Michigan, the committee's ranking Democrat, and the other members.

Energy Department spokesman Drew Malcolm said reports of price gouging were being turned over to the FTC.

The states with the most complaints were North Carolina, Georgia, New York, Pennsylvania, Texas, Illinois, Tennessee, New Jersey, Michigan and South Carolina.

Meanwhile, attorney's general from a number of states held a telephone strategy session to discuss the rapidly escalating fuel prices and possible investigations into gouging. Prosecution for price gouging is generally a state matter unless it involves some form of collusion or other activity in violation of federal antitrust laws.

Gasoline prices jumped 35 cents to 50 cents a gallon overnight from Wednesday to Thursday in some areas pushing to well over $3 a gallon after Hurricane Katrina shut down nine Gulf Coast refineries, disrupted gasoline pipelines to the Midwest and East and stopped 90 percent of the oil production in the Gulf of Mexico.

"If we get consumer complaints about (gasoline) prices, we'll look at those complaints to find evidence of anticompetitive conduct," said John Seesel, the FTC's associate counsel for energy issues.

But Seesel said the FTC has no jurisdiction over an individual gas station operator raising his price, no matter how high, unless there is some collusion among retailers. A number of states, however, have anti-gouging statutes. Following FTC policy, he declined to say whether any investigation were underway.

On Thursday, Attorney General Troy King of Alabama initiated a private telephone conference with a number of his colleagues from others states to discuss strategy in response to the rising gas prices and reports of huge overnight spikes by some gasoline retailers. No details about the private discussion were available.

There have been isolated cases of unusually huge price jumps, including a gas station in Georgia that briefly charged $6 a gallon when competitors ran out of gas. In Michigan, there was a price jump of nearly $1 a gallon overnight, although prices then receded, according to Rep. Fred Upton, R-Mich., who drove around his district on Thursday to gauge prices.

"Prices are averaging $3.19. It's as high as $3.58 from $2.61 on Tuesday," said Upton in a telephone interview. "My sense is the supply and demand equation does not fit a 60-cent (a gallon) increase in the last 36 hours."

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