Stations lash out at gas gouging accusations

Stations lash out at gas gouging accusations

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Associated press

SPRINGFIELD - Many of Illinois' independent gasoline stations may consider temporarily shutting down if a disaster similar to Hurricane Katrina hits, insulating themselves from future claims of gas gouging, an official with statewide trade group said Friday.

"God forbid we have anything like that again," said Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association, whose group's 500 members supply or own all but roughly 1,000 of the state's 4,500 gas stations statewide.

"For an owner to be concerned about the ramifications of raising prices is not right, and I don't think that's the way the American system should work," he said.

Attorney General Lisa Madigan had accused 18 gas stations of unjustifiably high prices after Hurricane Katrina slammed the Gulf Coast last August. Last week, her office said those stations each have agreed to donate $1,000 each to the Red Cross to avoid being sued by the state, though the gas stations insist they did nothing wrong.

Fleischli said the stations did not benefit unduly from the post-hurricane price increases - and that Madigan or other law enforcers, including state police and sheriffs, "harassed" certain stations that raised gas prices after Katrina.

Those businesses, he said, merely passed along higher costs, with the $3-a-gallon sale price in some areas reflecting the value of dwindling gasoline reserves.

"In the court of public opinion, many thought we were doing something illegal. The only thing they were doing was serving their customers," Fleischli said. "There was no deception."

The chief of the consumer protection division of Madigan's office disagrees, arguing Friday that the gas stations in question tacked on per-gallon charges well beyond ones they were entitled because of higher wholesale prices.

"We're not saying you should not pass on increased wholesale costs. We're just saying you shouldn't profit by the emergency," said Deborah Hagan, whose office fielded more than 2,000 complaints of high gas prices after Katrina.

At the request of Hagan's staff, 54 stations submitted their data about their wholesale costs covering the week after Katrina. The 18 stations confronted had "significantly higher margins," Hagan said.

The owner of Payne's Service Center in the southern Illinois community of Thompsonville - among the 18 stations that reached the deal with Madigan's office - on Friday insisted he did nothing wrong.

David Payne said the price of a gallon of regular unleaded gasoline at his independent station was $2.59 on Sept. 1. In anticipation of the next day's pricier delivery, he rose the price to $2.99, then up to $3.59 after he got the shipment and learned his cost actually had risen $1 per gallon.

Payne, who said his station raised its price to the penny of what its distributor was charging, said he agreed to settle with Madigan's office to avoid litigation costs.

"I can't afford to spend $5,000 to $10,000 on attorneys fees to prove my point," he said.

If another disaster hits, Payne said he'd "seriously consider" selling out his gas supply, then shutting off the pumps off and waiting until prices stabilize.

Said Hagan: "As long as they abide by the law, they'll be fine."

On the Net

Illinois Petroleum Marketers Association, http://www.ipma-iacs.org

Illinois State Attorney General, http://www.ag.state.il.us

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