Gas stations to be subpoenaed in price gouging investigation

State Attorney General Roy Cooper said starting Monday subpoenas will be sent to certain gas stations in the state – the first step in the state investigating price gouging claims.

Posted 12:20 p.m. Sep 13, 2008 — Updated 11:05 a.m. Sep 14, 2008

RALEIGH, N.C. — State Attorney General Roy Cooper said starting Monday subpoenas will be sent to certain gas stations in the state – the first step in the state investigating price gouging claims.

Amid fears Hurricane Ike would crippled the country’s oil refining capacity, many Triangle area drivers on Friday rushed to fill up gas tanks creating long lines at several stations, even causing some stations to run out of gas. Throughout the day gas prices fluctuated wildly. WRAL News saw posted prices ranging from $3.51 to $5.49.

“Any station or any wholesaler that’s trying to take advantage of this situation and is gouging consumers will face the music from our office,” Cooper said.

Companies found in violation of the price gouging law face a civil penalty of up to $5,000 for each violation.

Cooper did not say which gas stations would be receiving subpoenas, but did say the attorney general’s office will be looking for “unreasonably excessive” prices.

“It’s one of those things where you know it when you see it,” Cooper said.

Cooper said just because a station is charging a high price for gas doesn’t necessarily mean that station is guilty of price gouging. The station could be buying gas at high prices from its wholesaler.

Cooper told WRAL News on Saturday that more than 1,000 complaints have been phoned in to his office’s Consumer Protection Division since Friday. Because of the large volume of calls, officials are urging consumers to print out the complaint form from the division’s Web site and mail it to the office.

At this time, drivers should "shop around" and not get gas unless they need to, Cooper advised.

The average price of gas rose nearly 20 cents in North Carolina overnight.

The statewide average cost of a gallon of regular, unleaded gas was $3.86 as of 3 a.m. Saturday, according to the Oil Price Information Service, Wright Express and AAA.

At the same time Friday, North Carolinians paid an average of $3.68 for a gallon.

By Saturday, Raleigh drivers were paying an average of $3.882; Fayetteville, $3.82; and the Triad, $3.86.

Nationally, the average cost of gasoline rose less than 7 cents overnight, up to $3.733.

The price increase came despite a significant drop for crude oil prices on the futures market Friday – prices briefly sank below the psychologically important $100-a-barrel mark for the first time since April 2 before settling at $101.18.

The western part of North Carolina has been hit the hardest. Customers complained of gas selling for $5.99 a gallon on Friday.

In Asheville, motorists plopped down an average of $4.01 a gallon Saturday, up from $3.73 a day earlier. Prices in Charlotte also pushed over $3.915.

Prices were lowest along the coast, averaging $3.786 in Wilmington.

Nationally the Ike effect was also seen with gasoline prices surging overnight – to nearly $5 a gallon in some places.

The price jumps came after the wholesale price of gasoline soared to $4.85 a gallon Friday in anticipation of Ike's arrival.

Many stations have contracts to buy gas from suppliers based on prices set by those markets, said Tom Kloza, chief oil analyst with the Oil Price Information Service.

"They aren't gouging; they are simply passing along the wholesale cost," he said. However, a small percentage of stations owned by major oil companies are somewhat insulated from these forces, enabling them to keep prices lower.

Such market fundamentals could last for another few weeks, depending on how quickly Texas and Louisiana refineries shuttered by Ike can come back on line. "It's a mess," Kloza said.

Kloza said prices are more likely to be higher throughout the Southeast because they get fuel from Gulf refineries. He expects nationwide prices to begin falling later in the fall, perhaps as low as $3 a gallon by year's end, based on current oil prices of about $100 per barrel.

Damage to oil facilities

Late Saturday, the U.S. Minerals Management Service said there were two confirmed reports of drilling rigs adrift in the central Gulf of Mexico.

Ike shut down 14 Texas refineries with a total capacity of 3.8 million barrels of crude a day, or about 20 percent of the country's total output.

Ike's storm surge was less severe than predicted, potentially sparing refineries from additional flooding. However, the lack of electricity in and around Houston and western Louisiana – major hubs for oil refiners – poses a significant challenge for the energy industry.

CenterPoint Energy, the main utility in Houston, reported 1.3 million outages Saturday.

Refineries along the upper Texas Gulf Coast account for about one-fifth of the nation's refining capacity. Exxon Mobil's refinery in Baytown, outside Houston, is the nation's largest. Valero's refineries at Houston, Texas City and Port Arthur remain shut down, and all three have lost power.

The Sabine Pipe Line, a crucial natural gas conduit, has also been shut down. The CME Group, parent of the New York Mercantile Exchange, declared a force Majeure for all remaining delivery obligations for September natural gas contracts.

With the storm still pounding southeast Texas well into Saturday afternoon, oil refiners had not yet made thorough inspections to get a clear idea of any damage they may have sustained.

They said it was too early to say when the refineries would be restarted.

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