I-Team: Rising gas prices - gouging or supply & demand?
Feeling gouged at the pump? You're not alone. Prices in the Triangle have gone up 20 cents on average in the past couple days. But is that gouging? The answer is - maybe.
Stay on top of breaking news stories with the ABC11 News App
North Carolina Attorney General Josh Stein explained it this way: "Price gouging exists when a company, in this case a gas station, if they charge an excessively high price. And the way we determine that is, 'What price did they charge in the past before the event occurred?' and 'Do they have a business explanation?' Is there a justification? Have their prices gone up? And if they can justify it, then they are within the law. If they can't, if what's driving this is greed, that is what the price gouging law is meant to stop. My office is here to enforce the law to ensure that greed isn't what's driving business decisions but actual business input costs is what's driving them."
By Stein's own admission, there's a lot of gray area built into the law. With so many stations raising their prices at once, potentially before their own costs had increased, there's a very real question of whether they met the standard laid out by the Attorney General.
"I think that is a real cause for concern," Stein said. "I'm not going to say, in a blanket statement, that that is illegal. What we would have to do is get in conversations with the business and have them justify to us why they made the increase."
But NC State Economist Mike Walden says that often in the wake of a disaster like this, initial price hikes reflect basic market forces kicking in.
"Demand increases," Walden said. "Consumers hear 'shortage' and think, 'Maybe there will be no gas, I need to go top off my tank.' So you actually have a surge of buying which increases demand and anything that increases demand in economics will raise the price. And the other thing is anticipation that supplies may be limited making that current gas that's already in the tank more valuable. Sellers can sell it at a slightly higher price. We may not like those results but that's the way economics works. It's supply and demand."
Walden said prices could jump to $2.60 or $2.70 and it may not constitute gouging.
"They now have an asset that is worth more through the circumstances they didn't create but are able to take advantage of," Walden said.
He compared what we're seeing at the pumps now to what happened after Katrina when Walden said prices rose past $4 per gallon.
It will be up to Stein's investigators and the Attorney General's office to determine what is supply and demand and what's gouging.
Stein said in just the last day, his office has taken 130 complaints about price gouging. He said his team will investigate every single one.
"We'll go back to the business and we'll say, 'Show us what your price is today and what was it a couple months ago, and explain why you've increased the price," he said. "If they can show to us, to our satisfaction, that the reason they dramatically increased their price was because the cost of gas went up, then they're within the law. If they don't have a justification for it, then they're in violation."
"It really serves as a deterrent to people's greediest impulses," Stein continued. "When there's something big like Hurricane Harvey that affects the market, we don't want people to have greed drive their decisions because, in times of stress, people don't have an option of what to do. That's why North Carolina passed this law, that's why I'll aggressively enforce the law. And because of those two things, we'll end up deterring most bad acts from happening."
If you want to file a gouging complaint, click here or call (877) 5-NO-SCAM.
For up to date information on the aftermath of Harvey from the U.S. Dept. of Energy, click here.
