South Carolina’s anti-price gouging law apparently did consumers more harm than good during a month-long statewide gas shortage that started a year ago, The State newspaper reports.
That’s because some gas stations refused refills because of skyrocketing prices, an industry official told the paper.
“That law and threat from the (state) attorney general kept plastic bags on the pumps,” said Michael Fields, executive director of the SC Petroleum Marketers Association. “If they knew their next load would cost $5.50 (a gallon), they knew they would be accused of gouging. … They knew no one would believe, ‘I gotta charge this because this is what it costs.’”
A year ago today, news reports about refinery closings along the US Gulf Coast following Hurricane Ike led to a gas run that depleted supplies in distribution tanks in less than two days. Drivers began to worry about being able to find gas and cars lined up sometimes 40 deep for fill-ups.
A day after drivers began a panic-buying run on gas, SC Attorney General Henry McMaster invoked the state’s price-gouging law with fines up to $1,000 per offense and up to 30 days in jail. Hotlines were set up to take complaints.
As a result, some station owners refused to take pricey deliveries, fearing gouging complaints, said Fields, whose trade group represents convenience stores and fuel suppliers.
Frank Shumpert, who owns 10 Midlands stations, said he turned down deliveries of gas that would have cost him more than $5 a gallon soon after the shortage started, according to The State.
The state’s price-gouging hotlines drew 4,360 complaints after Ike. After nine months of investigation, most of the 37 stations and distributors that received closer scrutiny from the attorney general’s office could back up their price hikes.
In July, McMaster’s office settled price-gouging cases with three gas stations — including two in Lexington County — and a supplier. They agreed to donate a total of $6,500 to the American Red Cross to end the disputes.
McMaster said he did not seek criminal penalties against accused gougers because of the risk of losing the cases.
Still, the state’s price-gouging law worked during Ike by keeping stations and distributors honest, McMaster said. He plans no changes to the law or the hotlines.
Fields said he wants to talk with McMaster about possible changes to the gouging law or reporting of pricing complaints so that stations don’t fear being penalized because their costs rise during a crisis.
How about letting businesses decide what price they want to sell their products for? They paid for it, they own it and if consumers don’t like it, they’re free to shop elsewhere.
An interesting followup to this story would be to examine how much money the attorney general’s office squandered on its price-gouging investigation. Somehow, one suspects it was far more than the $6,500 that the three stations and one supplier ended up donating to the Red Cross to resolve the cases.
Retired Bank of Granite Corp. Chairman John Forlines has seen the value of his investment in the Hickory, NC-based financial services company fall from more than $13 million to approximately $965,000 in less than four years.
Forlines, who retired as chairman in January 2006 and is now chairman emeritus, remains the bank’s biggest shareholder. As of March, he owned 853,665 shares, or a 5.5 percent stake, according to a proxy filing.
Since he left his chairman’s post, the share price has fallen from about $16 to around $1.13 on Thursday, according to The Charlotte Observer.
“It’s been a big blow financially,” the 91-year old told the paper. “It’s been a big blow every other way.”
Last week, the Federal Deposit Insurance Corp. placed the Bank of Granite under a cease-and-desist order, imposing restrictions requiring the institution to raise capital levels and improve its oversight mechanisms.
The order does not mean the bank is going to fail but signals that regulators are seriously concerned and want it to stop practices they deem unsafe, according to The Charlotte Observer.
Troubles at the Bank of Granite, which began in 1906, first started to surface in late 2007. The bank announced a $4 million profit for the third quarter, but a few weeks later retracted the statement, and eventually said it had lost $22 million for the period, The Observer reported.
The bank said it had reviewed its portfolio, and decided to reclassify millions of dollars worth of loans as troubled.
Since then, the bank has lost another $43 million. The chief financial officer stepped down in July, though the bank said the departure was not related to earnings, the paper added.
A year ago regulators put the bank under a less formal sanction called a memorandum of understanding.