States Sue Over Gouging

State attorneys general, making good on threats to move against gasoline price gouging, have sued stations in Ohio, Michigan and Illinois under state consumer-protection laws that prohibit ''unconscionable'' transactions, the USA Today reported.

The stations were among those that boosted prices after terrorist attacks last week killed thousands in New York and Washington. The high prices ranged from $2.91 to $6 a gallon. The U.S. average during last week was about $1.58, the report said.

Wholesale prices, what the station pays for its gas, blipped up 5 cents to 15 cents a gallon as refineries and terminals closed for security reasons. But wholesale prices fell back quickly, according to fuel-tracker OPIS Energy Group.

From Tuesday through late Friday, in fact, wholesale gas prices fell 0.17 of a cent, to $1.0285 per gallon, while retail prices at the pump went the other way -- up 2.12 cents, to $1.5645, according to data collected for USA Today by Wright Express.

Wright Express issues most oil companies' and commercial fleets' private-brand credit cards, and collects data from tens of thousands of stations across the country daily. Wright Express is the chief source of AAA's widely cited daily gas-price updates. The information is based on gasoline purchases at more than 80,000 stations a day.

"As an enforcer of the law, we need to show that this kind of gouging will not be tolerated," Ohio Attorney General Betty Montgomery said.

To demonstrate zero tolerance, Montgomery sued even if station owners apologized and gave customers refunds. If the c-stores end up paying fines, she said the money would go to a relief fund for victims of the Tuesday attacks and their families.

Michigan Attorney General Jennifer Granholm said she got thousands of complaints about gas profiteering, a record on a single issue in such a short time. "Price gouging in the face of such a colossal national tragedy is immoral, un-American and clearly illegal," she said.

Attorneys general say action in other states is pending. Michigan, though, appears to be the worst state for price increases. Wright Express data show the average price per gallon in Michigan went up 11.03 cents from Tuesday through Friday -- nearly twice the 6.68-cent increase of the next-worst state, Arkansas. But wholesale gas prices in Michigan fell 1.44 cents. Only 11 states had greater wholesale price drops.

Some station owners say they were duped by wholesalers into paying more and misled into believing there would be sudden shortages. ''There was a fear of supply drought, so [wholesale] prices did shoot up during the day Tuesday, but quickly dropped and can't be blamed for high pump prices," said Fred Rozell at OPIS.

"It wouldn't be far-fetched to believe terrorists would target the energy infrastructure,'' creating legitimate worries about supplies," said Jonathan Cogan of the Energy Information Administration (EIA). "But that didn't happen," so those fears can't be blamed.
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