N.Y. AG studying rising gas prices

Jessica M. Karmasek Mar. 25, 2011, 1:18pm


ALBANY, N.Y. (Legal Newsline) -- New York Attorney General Eric Schneiderman says his office is conducting a comprehensive review of the rising cost of gas in Central New York and the state's Southern Tier.

On Wednesday, Schneiderman's office announced its investigation of pumps in the Southern Tier, pointing to the "sky-high" prices Binghamton residents are paying.

"Drivers across the Southern Tier are getting slammed at the gas pump, and have a right to know not only how gas prices are determined, but whether they're being taken advantage of," Schneiderman said in a statement.

"On behalf of consumers, my office wants to make sure drivers' hard-earned dollars are protected and that they are being charged fairly at gas stations. While we cannot guarantee that there is wrongdoing behind the high prices, we can assure drivers that we will study the situation to try to determine what is behind these price spikes, and go after any violations if they exist."

The next day, his office made a similar announcement, pointing to prices in the Syracuse area.

According to the American Automobile Association, the current average price of regular gasoline in New York State is $3.74, compared to $2.94 at the same time period in 2010.

In Binghamton, specifically, the current average price is $3.70, compared to $2.94 this time last year. In Syracuse, the current average price is $3.67, compared to $2.93.

Schneiderman said he would compile data on prices being charged in the areas, and seek to determine the causes behind the recent increase.

The attorney general said his study will focus on how the current market volatility determines the cost of gas for retailers and whether that cost is appropriately passed onto consumers at the pumps.

During disruptions in the oil market resulting from civil disorder, war, military action and other abnormal events, those who sell gasoline are not allowed to take unfair advantage of consumers by charging grossly excessive prices, he noted.

"At a time when the public is very skeptical about what goes on behind the scenes when determining gas prices, it is my responsibility to make sure that everyone involved in setting prices plays by the rules," he said.

Meanwhile, James Calvin, president of the New York Association of Convenience Stores, is questioning just how "objective" the attorney general's inquiry will be.

Calvin, in a statement Thursday, said the NYACS empathizes with the "financial and psychological distress" experienced by gas customers.

"It's no picnic for local retailers either, having to buy motor fuel 10,000 gallons at a time and forfeit more than half of their gross profit margin to Visa or Mastercard just to electronically process purchases made with credit cards," he said.

Calvin said the solution is simply competition.

"Whether it's motor fuel, fresh produce or restaurant meals, those who overprice lose business to those who price competitively," he said. "Pointing fingers may be a great way for consumers to vent frustration and politicians to make headlines, but the best and simplest recourse for price disparities between gas stations is to just buy from the lower-priced one."

He said the NYACS' members always have been "convenient scapegoats" for the increasing cost of gas. "But the reality is that they have no control over events in the Middle East and on Wall Street that precipitated the surge in wholesale prices they have had to reluctantly pass along in the form of higher prices at the pump."

NYACS, headquartered in Albany, is a not-for-profit trade association representing about 5,000 neighborhood convenience stores statewide that sell gas at retail.

Schneiderman said his office will release any relevant findings in the coming months.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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