Kentucky gas stations settle over price gouging claims

Nick Rees Jan. 27, 2009, 12:00am

Jack Conway (D)

FRANKFORT, K.Y. (Legal Newsline) -- Gas price gouging following September's Hurricane Ike and a subsequent windstorm has resulted in a $107,500 settlement between the attorney general's office and eight retail gas stations in seven Kentucky communities.

Five stores owned by Pilot Travels Centers, LLC, located in Corbing, Williamsburg, Middlesboro, Franklin and Oak Grove, have agreed to pay $100,000 as part of the settlement. T-Mart in Franklin, owned by Krunal, LLC, has agreed to pay $5,000 and Mike and David #2, Inc., which owns the Wingo T-Mary, will pay $2,500.

"Many of us were shocked and outraged by the scope of the price increases, and on Sept. 12 we decided they merited a closer look," Gov. Steve Beshear said.

Consumers began calling state officials with complaints of gas prices rising before the hurricane even made landfall. The volume of calls became so high that the attorney general's phone services were temporarily disrupted.

Prices were as high as $4.59 before landfall and went up to as much as $4.99 in some places. Some of the retailers were later found to have a profit margin in the one week period following the hurricane of $1.00 per gallon.

"Working with Governor Beshear, we were able to act quickly to protect consumers," Attorney General jack Conway said. "Because of our proactive efforts, retailers were put on notice that price gouging would not be tolerated and would be investigated. In most cases, we saw gas prices stabilize within 24 to 48 hours."

Beshear declared a state of emergency Sept. 12, triggering a Kentucky statue that gives the attorney general the authority to investigate claims of price gouging.

The attorney general created a hotline and email address for consumer complaints, which received nearly 2,000 phone calls and e-mails.

Retailers with multiple complaints against them were subpoenaed. The subpoenas included requests for wholesale and retail price date, which was then used to determine which stations had gouged customers.

"I encouraged consumers to be our eyes and ears throughout the Commonwealth to help us crack down on any retailers who might be trying to take advantage of Kentucky consumers," Conway said. "They responded by providing us with valuable evidence that included digital photos and receipts."

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