Stations Fined for Gouging

Press enter to search
Close search
Open Menu

Stations Fined for Gouging

The five owners of 11 different gas stations owe the state of Kentucky $47,500 in fines for charging too much for gas in the time after Hurricane Katrina, reported the Courier-Journal.

"On average, for these particular stations, the gross profit margin increased anywhere from more than 33 to more than 100 percent," said Attorney General Greg Stumbo at a news conference. Profits for stations increased from 47 cents to $1 per gallon, he added. The investigation reviewed prices from September and October of 2005.

Several of the stations deny the price gouging allegations, however. Fred Higgins, owner of two Fred's Minit Mart stations that was fined $10,000 agreed to pay because fighting "would have been a financial burden," he told the paper.

Minit Mart stations never priced gasoline higher than its competitors in the time frame, he continued. "We could not price it below the market in our communities … because we would have run out of fuel," Higgins said. "We couldn't sell below cost, because that too is illegal."

"Getting a windfall was never a consideration when we were going through all of this," said Bob Arnold, president of Max Arnold & Sons. Arnold paid $20,000 to settle allegations of gouging at four of his stations.

In addition, Stumbo announced at a press conference that he has asked for the records from all of the Speedway stations, approximately 130 locations, in the state. He also stated that an investigation into price gouging from refineries is ongoing.

Kentucky is one of 29 states that have passed laws against suppliers selling fuel products at "grossly" inflated rates during a state of emergency. The state of emergency was announced Aug. 31, 2005, when Governor Ernie Fletcher predicted the hurricanes would disrupt gasoline supply and remains in effect today, according to the newspaper.

According to the law, restitution plus an additional $5,000 fine is the penalty for each occurrence, however, "we did not do that, because it was the first time the law had been in effect and we wanted to use this as a learning experience," Stumbo said.

The fines will pay for the cost of the investigation, as returning money to individual customers is impractical, Stumbo said.