Energy

Idaho AG Opposes Retail Gas Gouging

In an unusual move, Idaho Attorney General Lawrence Wasden has offered a public (political) opinion regarding proposed legislation before the legislature.

GUEST OPINION
By Lawrence Wasden

I’m writing to make you aware of a piece of legislation currently working its way through the state Legislature. The bill is being pushed by Idaho’s gas retailers and, if approved, would make it easier for these businesses to price gouge during declared emergencies.

As you are likely aware, Idaho suffers from some of the highest gas prices in the nation. And by law, I have only two tools to fight unreasonably high gas prices. One prohibits businesses from colluding to set prices. The other prohibits sellers of fuel, food, water and medicine from charging “excessive or exorbitant” prices during an emergency. Senate Bill 1041 was proposed by the Idaho Petroleum Marketers & Convenience Store Association to undercut my ability to protect you from price gouging during an emergency.

So why have Idaho’s gas retailers made this a priority now? Well, there’s a backstory here. Last March, COVID-19 prompted an emergency declaration that triggered the state’s price gouging law. In the weeks that followed, oil prices fell dramatically. Gas prices at the pump, though, did not drop as quickly.

I wanted to know why. So I contacted Idaho’s three largest gas retailers – Maverik, Jacksons and Stinker Stores – and asked them to explain their pricing and remind them that Idaho’s price gouging law was in effect. They rejected my concerns and did not satisfactorily explain the pricing we were observing. My office soon initiated a formal investigation that focused on the retailers’ margins. I did so because Idaho’s current price gouging law directs that examination as a way to determine whether prices are excessive or exorbitant.

We found that during the first few weeks of the pandemic, these retailers’ margins increased dramatically. Our independently-sourced data from the last 14 years showed Idaho retailers usually make about $.10 per gallon of gas. (The gas companies contend their historical margins are closer to $.20 per gallon.) Three weeks into the pandemic, Idaho gas retailers – including the three my office investigated – were making a record margin of $.63 per gallon. This was well above the previous high of $.42 per gallon set in 2008.

While retailers could buy their gas at a steep discount, those savings, by and large, weren’t passed on to you. In fact, despite some increased costs connected to the pandemic and a reduction in their sales volumes, these inflated margins allowed the retailers’ gas profits to swell.

After presenting our findings to the retailers, my office negotiated a settlement that includes $1.5 million in credits that will go back to Idaho consumers this year. That settlement was announced on November 30. Less than two months later, the gas retailers were in front of the Idaho Legislature urging major changes to the very law that allowed my office to investigate them in the first place.

If the gas companies’ proposed changes become law, a future investigation and settlement similar to the one initiated by my office last year would no longer be possible. So far, the gas retailers’ bill has been welcomed by lawmakers. It passed unanimously in the Senate and is now headed to the House. If successful there, it could be signed into law by the governor.

It’s extremely rare that I speak publicly on the merits of a particular piece of legislation. But you deserve to know about this bill. If you believe that gas prices shouldn’t be excessive or exorbitant during an emergency, you need to contact your legislators now and let them know.

Comments & Discussion

17 comments for “Idaho AG Opposes Retail Gas Gouging”

  1. McLean is worse than bieter
    Feb 16, 2021, 7:13 am

    Ugh. Wasden. What a waste of oxygen.

    Remember Jim Jones when he was AG? A well placed statement that he would investigate high gas prices and boom, they’d fall immediately.

    Wasden never does that. Someone should find out how many campaign contributions he got/gets from the jacksons and other gas station purveyors.

    PS, how DOES one get part of the whopping $1.5 million settlement? Funny how Wasden doesn’t explain that.

  2. “Senate Bill 1041 was proposed by the Idaho Petroleum Marketers & Convenience Store Association to undercut my ability to protect you from price gouging during an emergency.” Shouldn’t senate bills be proposed by our ELECTED PUBLIC SERVANTS for the betterment of the public? As opposed to being put together by lobbyist? For GREED.

  3. Here’s SB1041’s “statement of purpose”: This legislation specifies that the statute prohibiting excessive pricing during a declared emergency applies to exorbitant or excessive increased prices to the consumer rather than to the margin between wholesale and retail prices.

    So… if Jackson’s sells gas for $2/gallon, it doesn’t matter if Jackson’s is paying $1.20 or $1.90? As a consumer, I’m in favor of the AG’s office having some power to protect end-consumer interests.

    I’m generally in favor of “let the market decide.” However, if my understanding is correct, in this area we have a couple things that thwart a classic free market: 1) a petroleum pipeline that is, in essence, a monopoly at the wholesale level, and 2) a combine of retailers that work together to set prices and thereby undercut free-market competition.

    (If that is bad understanding, somebody please explain what I’m getting wrong.)

    Maybe we need a watchdog like the public utilities commission, advocating for consumers’ interests. I’ll take AG Wasden at his word, and thank him for being our advocate. Hopefully our legislators and governor are more interested in our welfare, than that of the petroleum/convenience-store lobby.

  4. Paul Jurczak
    Feb 16, 2021, 12:27 pm

    “Shouldn’t senate bills be proposed by our ELECTED PUBLIC SERVANTS for the betterment of the public?”

    Not in plutocracy, which unfortunately is confused with democracy by too many Americans. The blue pill seems to be much easier to swallow…

    BTW, if the law was broken, I would like to see some jail time not a negotiated settlement or deferred prosecution. Parting with a portion of ill-gotten gains becomes a routine part of a business plan, not a deterrent for plutocrats.

  5. Not exactly a political opinion.
    More of a legal letter.

    Thank you and good job to the AG for bringing it to light and showing how Idaho legislators are NOT interested in consumers or the individual citizen (unless it is to do with guns or the bible).

    Instead of using a lull in fuel prices to implement more resources to pay for better highway infrastructure, the Idaho legislature is happy with allowing fuel companies to triple their profits. Meanwhile rural Idaho struggles to get decent roads.

    Time and time again.

  6. `McLean is worse than Bieter is AWOL
    Feb 16, 2021, 2:44 pm

    “McLean … .Bieter” come on!! This is about the legislation that favors Jackson, Maverick and the other profiteers. Get on board and stop being a misinformed (or stupid) criticizer.
    Yes, the AGs could have done better, but Idahoans need to contact their Reps in the House and Gov, Little to stop this profiteers’ legislation.
    “McLean …,” we know you don’t know much, and you proved your worthlessness. Come on!!

  7. Janet Harman
    Feb 16, 2021, 6:17 pm
  8. I think the intent of no price gouging is to make sure businesses do not take advantage of consumers during an emergency, but I would also think the idea was most emergencies are regional or local, and short term in nature like recovering from a flood, tornado, wild fires, etc. I am not sure those who wrote the law envisioned a year long pandemic.

    Given the context of a pandemic I have to agree the gas stations deserve some consideration on the margin. Gasoline is a commodity which relies on large volumes due to low margins. When the volume business goes away, you still have all the fixed costs and need more margin. Gas sales plummeted while everyone was staying home, not going on vacation, working from home, etc. Yet these gas stations still had all their overhead, property, employees, property taxes, utilities, etc. Remaining open and solvent for gas stations likely required higher margins due to drastically lower volumes.

    For me it is not so much what their margins were, it is whether they colluded to keep prices high, as opposed to doing what retail business are supposed to do, that is compete against each other. The Federal Sherman Act does not regulate the prices that are to be charged, it prohibits the collusion among competitors to establish an artificial price that is out of balance of a free market.

    I think the AG and Legislators should focus on any possible collusion and not be in the business of determining what is a reasonable margin.

  9. People working from home, not driving kids to school, not taking road trips, more electric cars on the road – looks like fear of a long term drop in profit may possibly be behind the lobbyists on this one? Trying to find a way to make up for losses?

  10. Hey Paul PLUTO is no longer classified as a planet!

  11. The legislators don’t give a damn about my opinion unless it agrees with their preconceived opinions. While I’m here… where’s our property tax relief? They fled town last year by kicking that can down the road. And not a peep so far this year. Idiots too busy tilting at windmills.

  12. western guy
    Feb 17, 2021, 9:43 am

    ‘McLean is worse…’ doesn’t read much. The initial news stories regarding this matter clearly stated that the $1.5 million remedy would be handled by reducing the pump price temporarily until the levied amount had been reached.

  13. I agree with what JJ said above. Governments should not have a say in what an appropriate level of margin or profit is for private businesses. This was not an emergency that required the use of gasoline as fuel to escape an impending disaster, e.g. a category 5 hurricane forecast to make landfall in Florida, requiring an immediate escape inland while gas stations charge desperate customers $25/gallon. In fact gasoline demand was suppressed due to the dictates of the same state gov’t, and I don’t recall gasoline ever being priced above the still relatively modest level of $3/gallon at any time in Boise during the last year. The gas retailers may have been using the larger margins on retail gas to cover their fixed costs and prepare for an extended economic downturn.

    Sure, there are still workers out there who are required to commute in to a workplace every day who must buy gasoline. But how many were taking advantage of the stimmy checks and “enhanced” unemployment to goof off and take road trips out to various locations around the state? We had record use of our public lands in 2020, and many of those same areas got trashed out by heavy usage. Customers were still willing to pay the market price for discretionary usage.

  14. Good points JJ.
    If we apply the same to restaurants, my meal will now cost 5 times as much.
    And all the restaurants quickly know the price change, so they all increase their prices to “increase their margins”. Fair enough?

    As to the duration of an emergency, wartime comes to mind and more like December 7th. Four years, five or more- still an emergency!
    Given that the emergency declaration law and the stay at home orders law do specifically address an epidemic, I would say the law was written for times like now.
    As I read the statute citation it was created in 1927 (due to 1917-18 pandemic likely?).

    “State of extreme emergency” means: (a) the —; or (b) the duly proclaimed existence of conditions of extreme peril to the safety of persons and property within the state, or any part thereof, caused by such conditions as air pollution, fire, flood, storm, EPIDEMIC, riot or earthquake, insurrection, breach of the peace,—”

    Epidemic: is defined as “an outbreak of disease that spreads quickly and affects many individuals at the same time.”
    Sound like 2020 to me.

    https://legislature.idaho.gov/statutesrules/idstat/title46/t46ch6/sect46-601/

  15. Hey wait a minute
    Feb 17, 2021, 2:40 pm

    Easterner, You should have left out your first two lines. By including them, you removed any doubt as to your own ignorance of the law and your lack of common sense.
    Wasden’s “Guest Opinion” does not cite a single statute. So how can you say its more of a legal letter? Ignorance! Even a formal AG Opinion is distinguished as a non-binding opinion based on Idaho statutes and sometimes case law.This guest opinion is merely a way to inform the public. It’s a helpful awareness post as opposed to your derailment of facts.
    “Time and time again” you sound like a reporter who knows very little, assumes a lot, and is flat out ignorant of the law.
    Your dig about the legislature and guns and the Bible is especially lame. Stick to the facts – price gouging exists in Idaho, and it needs to be stopped!

  16. Retail gas price gouging needs oversight
    Feb 18, 2021, 11:29 am

    The current problem of gas price gouging by the Idaho gas monopoly has come to the forefront with the huge increase during then Covid pandemic. However, Idahoans have been ripped off for over 50 years.
    How significant has the gouging been? The best example is the rise to multimillionaire status by our own John Jackson. John started with one small gas station in Homedale. Then he joined the gang, and his $$$ holdings rose to include hundreds of Jackson Convenience stores throughout the west. When Mr. Jackson had more money then he knew what to do with, he started his Jackson Jet 🛩 fleet business. You’re welcome John and Jeff.
    The AG’s Office has said that they cannot find evidence of price fixing. For more nausea, the AG has said that the gas station businesses have a right to make a profit. So Mr Wasden and Senator Den Hartog, please work for a solution and get Idaho residents a $$$$$ refund from these pirates 🏴‍☠️

  17. Answers require information
    Feb 19, 2021, 8:19 am

    The gas that we burn in our motors in Idaho is sourced from out of state. It is therefore interstate commerce. I am thinking that the price that the retailers pay is very, very regulated. How many times a week or month do they buy, and how is that price determined? Spot prices? Cost per barrel? A contract negotiated by their wholesalers? Understanding that would be helpful.

    Without price restraints they will gouge to the bone. Those are their already historical actions. Gas is a commodity. It is not like selling donuts which are a discretionary consumer good. Which for, by the way, Maverick is asking $1.69 per maple bar.
    Quit buying what is inside their building and there will be price competition. Otherwise, the owners are at their cabins, with their boats, in their new cars, on their new iPads. Their luxury homes were not enough.

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