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.