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    Texas AG Threatens Gas Price Gougers with Fines

    As reports pour in, state attorneys general from Texas, Delaware and New York take action.

    AUSTIN, Texas -- Attorney General Greg Abbott warned price gougers that they would be sued or fined after his office received dozens of complaints from Gulf Coast residents, including reports of $5-per-gallon gas and a 12-pack of water for $35, The Dallas Morning News reported.

    More than 100 calls had been registered at the attorney general's consumer protection office in just two days, spokesman Tom Kelley said in the The Dallas Morning News report. "We had expected them to trickle in, but they're coming in steadily," he said. Kelley said most of the complaints were from the Houston area.

    Abbott told the Morning News that he had instructed aides to take "quick legal action if we find businesses deliberately gouging consumers in advance of this storm and in its aftermath."

    "It's all over the map, from big-box retail to mom-and-pop convenience stores," Kelley told the paper. "It's not very advisable for a business to do this. What they might have to pay in fines and fees will greatly overshadow any short-term profit."

    In addition to high prices for water and gas, consumers were reporting exorbitant prices for car rentals and building materials. "You'll see some increase in prices," Kelley said. "But if it's off the chart, we want to hear about it."

    Offenders could be named in lawsuits and subject to fines of $20,000 for each violation under the Texas Deceptive Trade Practices Act. The attorney general's office filed price-gouging lawsuits after Tropical Storm Allison in 2001. Those cases involved about 10 businesses that were found to have bilked consumers after the storm had passed.

    In related news, CSNews Online recently reported that the American Automobile Association (AAA) Mid-Atlantic was calling for an inquiry into gasoline prices in Delaware, which are significantly higher than the national average.

    Attorney General M. Jane Brady asked all 400 Delaware gasoline retailers to send the prices that they paid distributors for their gasoline and the price that they charged consumers, spokeswoman Janice Fitzsimons told Newsday. Oil industry officials say prices spiked in Mid-Atlantic states after Katrina because they get so much gasoline from pipelines supplied by the Gulf Coast. Two pipelines that supply some Mid-Atlantic states were shut down in the days after the storm and only came back on line this weekend, said Ron Planting, an analyst for the American Petroleum Institute.

    In New York, State Attorney General Eliot Spitzer's office responded to consumer complaints of alleged gas-price gouging and began to collect documentation of recent retail prices and wholesale costs from about 65 service stations and convenience stores.

    The New York Association of Convenience Stores said that letters, not summonses or subpoenas, went out Sept. 7 to selected retailers requesting price data by Sept. 12 as part of an investigation of whether price hikes in the aftermath of Katrina were warranted.

    "As much as we despise such fishing expeditions, we recommended that member retailers who were contacted comply fully with the request," said NYACS president James Calvin. "To my knowledge, all of our members acted responsibly and in the best interests of their customers in reacting to the wild surge in wholesale prices."

    Spitzer asked each retailer to provide the following documentation. The price at which they sold their lowest priced grade of gas on every day between Aug. 1 and Sept. 7. If the gas was sold at more than one price on a single day, they were asked to indicate the time periods during which each price was in effect.

    Retailers also had to provide the price they paid for the lowest priced gas they sold for all gas purchased between July 1 and Sept. 7. They were told to indicate the date and time of the purchase, the volume of gas purchased and the price per gallon they paid for it. Lastly, retailers were asked to submit copies of all invoices for gas purchased between July 1 and Sept. 7.

    "While the letter assured the retailers that they were not being accused of any wrongdoing, they managed to work the terms 'price gouging,' 'fraud perpetrated by businesses on consumers' and 'deceptive business practices' into the first paragraph," Calvin said.

    Marc Violette, Spitzer’s spokesman, told NYACS it was "an effort by our office to better understand the economic factors that underlie the price we pay at the pump." He said they would not disclose the stores’ locations in the media. "We don't want to stigmatize them," Violette said. "We're not prejudging the situation. We're not assuming any illegal activity is under way. It's quite possible the station owners have a story to tell and we want to hear it."

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