Gas price crackdown has no legal authority

Gas price crackdown has no legal authority

‘Market emergency’ needed for gouging prosecutions

Patrick administration officials are pledging to crack down on gas stations engaging in price gouging, but under current state regulations they have no legal authority to take any action.

With gasoline prices averaging $3.73 a gallon, the state Office of Consumer Affairs and Business Regulation received widespread press coverage yesterday for deploying nine inspectors to check for gasoline price gouging.

“We go in and we’ll take a look at their records,” Barbara Anthony, undersecretary of consumer affairs and business regulation, told Channel 5.  “We will take a look at their wholesale costs.  If we see that their retail price is so far above their wholesale cost that we think this is totally unfair to consumers, we will refer that to the attorney general’s office and ask them to take appropriate prosecutorial action.”

But Attorney General Martha Coakley doesn’t appear to have the legal authority to do anything at this point. State regulations say, “It shall be an unfair or deceptive act or practice, during any market emergency, for any petroleum-related business to sell or offer to sell any petroleum product for an amount that represents an unconscionably high price.”

Dan Rosenfeld, Anthony’s press spokesman, said no market emergency has been declared. He also said the state has no particular price in mind that would represent price gouging.

Nevertheless, Rosenfeld says, inspectors, as part of their regular duties making sure that gas pumps are working accurately, will keep on the lookout for gas stations with prices that make them outliers in the market. He said the outliers will be referred to the attorney general for prosecution.

Asked how the inspectors could act on alleged price gouging without a market emergency being declared, Rosenfeld repeated that outliers would be referred to the attorney general. Rosenfeld said no referrals to the attorney general have been made yet.

Michael Giberson, an energy economist at Texas Tech University who has written about price gouging, says that public officials sometimes use inspections as a “publicity stunt so it appears they’re taking action.  They want to look like they’re doing something about the high cost of gas or some other commodity.”

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A report by the Federal Trade Commission says that crude oil prices are the main driver of retail gasoline prices. “The FTC has done numerous studies through the years and has never found price gouging at the pump,” says Carlton Carroll, a spokesperson for the American Petroleum Institute in Washington, D.C.

Matthew LeLacheur, executive director of the New England Service Station and Auto Repair Association, said state officials appear to be picking on small service stations that have nothing to do with the rising price of gas. “They’re looking for the sound bite at our expense,” he said.