County Leg. Passes Law to Fight Price Gouging
Suffolk Life Newspapers, January 6, 2006
By Michelle Pirraglia

With New York State Attorney General Eliot Spitzer recently fining 15 gasoline stations for “unwarranted” cost hikes during the aftermath of Hurricane Katrina, local officials are attempting to protect consumers from price gouging at the pump.
“I think this is the right approach,” said Legislator Jon Cooper (D-Huntington). The Legislature passed his resolution
on December 20, which would prohibit gas stations within the county, as well as distributors anywhere throughout the United States that sell to Suffolk County retailers, from raising the price of gasoline more than once per day. As of press time, the bill was still being considered by County Executive Steve Levy, who must sign the legislation in order for it to become law.
Originally, Cooper had only included gas stations in his resolution. However, in speaking with representatives from the Long Island Gasoline Retailers Association, Cooper decided to add a clause regarding the local gas terminals.
“Their costs could go up more than once a day,” Cooper said of the gas stations, noting that price increases by distributors directly affect the retailers. “They work on such a tight margin they would lose money ... I worked with [LIGRA] very closely to draft this bill. It’s a way of protecting local businesses and, at the same time, preventing price gouging.”
According to the resolution, “No person shall deliver or distribute motor fuel within the county of Suffolk if the price per gallon of the motor fuel that is being delivered has been increased more than once in any calendar day.” The penalties for breaking this law, if it is enacted, range from fines to a revocation of their license, according to the resolution. The legislation goes on to state that, if a station or terminal can provide documentation that the price was increased to them more than once, there will be no penalties.
LIGRA has come out against similar bills, and was initially opposed to Cooper’s legislation before he included gas terminals under the law as well as local retailers. “The increases were brought by the distributor,” said Kathryn Odessa, executive director of LIGRA. “The cost must be passed on to the public.”
Lashing out at the recent fines Spitzer placed on 15 gas stations throughout the state, including three in Nassau County, Odessa challenged the common definition of gouging. “Stations in the area must be out of supply for there
to be gouging,” she said. “Nobody was out of supply. I haven’t seen price gouging by that definition.”
Comparing gas stations to other retailers, such as supermarkets, Odessa said LIGRA believes the law was not
broken by any of the stations. “Retailers can charge anything they want to the public, like any retail operation, but they want to be competitive,” she said.
“I don’t think they fully understand the law,” said Paul Larrabee, spokesperson for the attorney general’s office. “These stations that were cited gouged the public. They charged excessive amounts, and the consumers paid the price.”
Larrabee referred to a portion of the General Business Law of New York State, which, in part, states, “During any abnormal disruption of the market for consumer goods and services vital and necessary for the health, safety and welfare of consumers, no party within the chain of distribution ... shall sell or offer to sell any such goods or services
or both for an amount which represents an unconscionably excessive price.”
According to a statement from Spitzer’s office, all 15 stations increased the difference between the cost of the gas and its sale price by 25% or more after the hurricane. Larrabee also noted that all the stations chose to settle with
the state, agreeing to civil penalties, with the risk of larger fines up to $10,000 if there is price gouging in the future.
“I don’t begrudge anyone to make a profit,” Larrabee added, “but when the stations charge excessive amounts during
a time of natural calamity, the public should be protected.”
Representatives from LIGRA are also fighting against a bill proposed by Senator Carl Marcellino (R-Oyster Bay),
which is similar to Cooper’s original bill. “It’s completely unfair,” Odessa said. “They [gas stations] are not taking advantage of people, they’re just trying to see what to charge to make a profit.”
“We’re not accusing anyone of price gouging,” Marcellino said of his bill, which was passed in the state Senate in September but has not yet been brought to the floor of the Assembly. “We’re just trying to put some stability into the system.” He added that, shortly after Hurricane Katrina, many residents observed cost increases during a 24-hour period. “Most retailers do not buy gas three times a day,” he noted. “So why is it going up? ... Nobody is suggesting that gas stations are making major profits, but it isn’t fair to the consumer to have the prices change like that.”
Odessa added that laws addressing price gouging concerns should have ramifications for terminals, as well. “You can’t just [penalize] one, you have to do both.”
 

Bill would strengthen law on gouging
New York Newsday, January 11, 2006
By James Bernstein

     Less than a month after charging 15 gas stations across the state with price-gouging after Hurricane Katrina, State Attorney General Eliot Spitzer yesterday proposed strengthening laws against "unconscionably excessive prices" at the pump.
     Under a bill submitted to the Legislature, retailers of gasoline or other consumer products would presumed to be gouging if they raised prices 25 percent or more after a hurricane or other market disruption.
     In late December, Spitzer charged 15 stations - two in Nassau - with price gouging of 25% or more.  The stations paid a total of $63,500 in fines.  Other retailers, distributors and wholesalers remain under investigation, his office said.
     Spitzer's bill would allow courts to hand out fines of $500 per violation, plus three times the total profits for such violations.  Currently, the attorney general's office must establish a "gross disparity" in prices charged before and after a market disruption.  The maximum penalty a court can now impose is a $10,000 fine.
     The Long Island Gasoline Retailers Association said the bill unfairly targets retailers, but the New York State Public Interest Research Group supports it.
     Spitzer, a Democrat, is a candidate for governor.  But state Sen. Charles Fuschillo (R. Merrick), chairman of the Senate's Consumer Protection Committee, yesterday said the issue was not a political one.
     "This is a serious issue," Fuschillo said.  "Whatever we do has to benefit the consumer."
     Fuschillo said he would carefully consider Spitzer's bill.
He also said last year he proposed $25,000 fines for price gouging and will pursue the matter this year.
     "Spikes in prices for gasoline and home heating fuel following last year's hurricanes caused public outrage and tested the limits of the very laws enacted to protect the public from price gouging," Spitzer said in a statement.
     He said the bill would "better protect consumers against unconscionably excessive prices" and would also more clearly define violations.
     "The establishment of a clear threshold for price gouging violations removes the uncertainty that merchants face when prices are changed after a market disruption." Spitzer said.
     But Kathy Odessa, the gas retailers' executive director, said Spitzer should go after the wholesalers and distributors.
     "They're attacking the wrong person," Odessa said.  "When prices are raised on the street, in most cases it's because the distributor or wholesaler is raising the retailer."