Local News

Six gas stations cited for price gouging

Posted October 20, 2008 3:44 p.m. EDT
Updated October 20, 2008 11:17 p.m. EDT

— The owners of a Fayetteville gas station and five stations in Cherokee and Clay counties have agreed to repay customers who bought overpriced gas last month, Attorney General Roy Cooper said Monday.

Cooper also filed suit against the owner of a Montgomery County station he accused of price-gouging in the wake of Hurricane Ike.

In the days before and after Ike hit the Texas Gulf Coast on Sept. 13, pump prices across North Carolina skyrocketed amid fears that the storm would cripple U.S. refining capacity and create gas shortages.

Thousands of drivers complained to the Consumer Protection Division in Cooper's office that prices went up too high and too fast.

"We got thousands of phone calls from consumers who were understandably upset," Cooper said.

The Attorney General's Office subpoenaed the owners of 26 stations statewide, demanding information on their wholesale prices and the retail prices they charged. Cooper said stations could not be cited under North Carolina's price-gouging law if they were simply passing along their higher prices.

The Circle B station on McPherson Church Road in Fayetteville raised its prices from $3.99 to $5.49 a gallon for regular unleaded on Sept. 12, overcharging customers by more than $1,000 in a five-hour period, Cooper said.

"The price rise was pretty dramatic over a short period of time," customer Peter Deveaux said.

Station owner Dilip Gala agreed to refund $1.50 a gallon to customers who bought gas at the station that day. Credits will appear on the monthly statements of drivers who used a credit card, and drivers who paid cash will have 30 days to present a receipt or other proof of purchase to the station for a refund.

"Good idea, more refund, more money," Deveaux said.

Five Big D stations in Murphy, Marble and Hayesville overcharged consumers $2,320 on Sept. 12 and 13, marking up gas to $4.99 per gallon, Cooper said.

Samuel W. Duncan Sr., president of Big D, agreed to refund customers based on the grade of gas purchased and the station where it was bought. Those who paid cash have 30 days to present some proof of purchase to the station for a refund, while those who used credit cards will get a credit on their monthly statement.

Circle B also will also pay $5,000 in civil fines to the state, while Big D will pay $10,000 in fines. The money will go to North Carolina public schools.

Both companies must provide the Attorney General’s Office with an accounting of all refunds made to consumers. Any amount that is unable to be returned to consumers will go to a fund to provide energy assistance to people in Cumberland, Cherokee and Clay counties, Cooper said.

“When families are struggling to make ends meet, the last thing they need is to be gouged at the pump,” he said in a statement. “These stations are making things right for consumers and other stations should do the same.”

The Attorney General's Office was unable to reach an agreement with Steve Compton, the owner and manager of Tire Pro, also known as Troy BP in Troy, so Cooper filed suit against the station. The suit alleges that the station raised its prices to $5.98 per gallon on Sept. 12, meaning that its profits rose from about 14 cents per gallon to at least $2.23 cents per gallon.

The suits seeks a court order that the company pay refunds to consumers and civil penalties to the state.

Cooper said the price-gouging investigation was ongoing and he expected to reach more action against gas stations accused of price-gouging.

“We put our price gouging law in place not only to punish wrongdoers, but also to serve as a deterrent,” he said. “Consumers are our eyes and ears out there, and we appreciate their help spotting and reporting possible gouging.

"We believe there was price-gouging going on out there, and I think you will see future agreements and future legal action against these stations as well."