Kentucky fires shot against gas companies

John O'Brien May 11, 2007, 11:00am


FRANKFORT, Ky. - Turns out Hurricane Katrina litigation doesn't end with insurance companies.

Kentucky Attorney General Greg Stumbo on Thursday filed a lawsuit against Marathon Oil Corp., Marathon Petroleum Co. and Speedway SuperAmerica, alleging the three engaged in gouging the cost of gasoline following 2005's two major hurricanes, Katrina and Rita.

Stumbo says the companies overcharged Kentucky consumers more than $89 million during a declared state of emergency.

"The worst thing about the massive overcharging for gasoline is that it took place during a grave national emergency," Stumbo said. "Our nation was rocked by hurricanes Katrina and Rita. It was a time for Americans to pull together but the lure of easy money made Big Oil hold consumers hostage to high prices.

"We all must buy gasoline in order to work, travel, buy food for our families and tend to the needs of our loved ones. Based on an exhaustive review of the evidence we are confident that Marathon's price increases during the emergency period were not justifiable."

Kentucky becomes the first state to charge a major oil refiner with price-gouging, Stumbo said. Marathon is Kentucky's largest wholesale supplier of gasoline.

Of the more than $89 million allegedly overcharged, Marathon was responsible for $86 million, while Speedway SuperAmerica overcharged an additional $3 million.

When Katrina hit the U.S., Stumbo requested Gov. Ernie Fletcher declare a state of emergency. Fletcher complied.

Stumbo helped push price-gouging legislation in 2004 that says during a declared emergency, "No person shall sell... a good or service...for a price which is grossly in excess of the price prior to the declaration and unrelated to any increased cost to the seller."

"When we proposed this law we could not have known the calamity that would fall before us," Stumbo said.

Stumbo said he received nearly 700 calls from consumers alleging price-gouging. Stumbo has subpoenaed 30 Kentucky retail gas stations and 13 petroleum refiners and suppliers.

"With this suit, I am sending a clear message to gas refiners, wholesalers and retailers that they cannot grossly inflate prices during a crisis. It's just plain wrong and won't be tolerated in Kentucky," Stumbo said.

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