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State Investigates Rise In Gas Prices

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By MICHAEL SASSO

The Tampa Tribune

Published: September 16, 2008

TAMPA - State regulators investigating gasoline price gouging complaints are turning their attention from retailers to oil companies, wondering whether they inflated the prices they charged gas station owners in recent days.

A big question on the state's mind: why gas prices rose so much in the wake of Hurricane Ike when there is no real shortage of gas in Florida. According to the Florida Energy and Climate Commission, the state has about 177 million gallons of gas in storage in gasoline terminals across Florida, a figure that is "fairly average," said Sarah Williams, a spokeswoman for the commission. An additional 160 million gallons is expected in Florida within nine days, she said.

In the wake of thousands of complaints of price gouging, Florida Agriculture and Consumer Services Commissioner Charles Bronson said Monday he is issuing subpoenas for the financial records of 16 major oil terminals in Florida. The terminals primarily are operated by the oil companies.

"It's our opinion that price gouging doesn't only occur at the retail level," said Terence McElroy, a spokesman for the agriculture commissioner.

David Mica, director of the Florida Petroleum Council, an organization of the American Petroleum Institute, said it's difficult to speak about specific gas prices in certain regions. However, he said a huge percentage of the nation's domestic oil and refining capacity is not operating right now, and it will take some time to see the full effects of Hurricane Ike.

In recent days, the Florida Attorney General's office and the agriculture commissioner's office have been deluged with complaints of price gouging. On Monday, Bronson's office said it had received more than 2,300 complaints over the past three days, and the attorney general had received more than 4,000 complaints as of late Monday afternoon.

There have been scattered reports of gas stations across Florida that increased their prices by 50 cents or more on Thursday and Friday. That prompted the attorney general to subpoena the records of four companies on Sunday: Flying J, Dodge's Gas Stores, Valero and Pilot Travel Centers.

Lesser price increases were felt widely across Florida and the Tampa Bay area. For example, in its daily survey of gas prices AAA found that the average price of regular unleaded in the Tampa area was $3.784. That is up more than 5 cents a gallon from Sunday, when the average price was $3.731. A month ago, the average price was $3.709, according to AAA.

On Monday, Bay area drivers sometimes drove up to gas stations searching for cheap gas, only to find that regular unleaded was sold out. That was the case at a Mobil station on Dale Mabry Highway in south Tampa.

"Now that the hurricane's hit, that's their oil companies new excuse for raising prices," said Greg Evans, an Orlando delivery truck driver filling up his personal car at the Mobil station.

Gas retailers and retailer trade groups insist that gas station owners are not behind the price spikes. When Hurricane Ike hit, everyone was concerned about how badly the Gulf of Mexico's oil platforms and other infrastructure would be damaged, said Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association. As it turned out, the infrastructure wasn't that badly damaged, and prices already have begun to fall, Smith said.

Nonetheless, the threat caused wild speculation last week on the "spot market," where many independent gas companies buy gasoline, Smith said, which caused prices to rise. Bill McKnight, president of Automated Petroleum and Energy Co. of Brandon, which owns or leases more than 200 gas stations in Florida, said the spot market went "crazy" last week, with gas selling for as much as $4.50 a gallon.

A big question that the state wants the answer to is why oil companies raised the wholesale price of gas they charged retailers, when there were millions of gallons of gas in storage in Florida already. The "$64,000 question," Smith said, is whether oil companies were just passing along increased costs to their customers or were trying sell the gas they already had stored in Florida at a higher price.

The attorney general's office has set up a toll-free hot line for people with complaints of gas gouging: 1-866-966-7226.

Reporter Michael Sasso can be reached at (813) 259-7865 or msasso@tampatrib.com.

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