Idaho accused gas retailers of price gouging. Now they want a law to curb state’s power
Idaho’s three largest gasoline retailers agreed to provide $1.5 million in gas discounts this year, after Idaho Attorney General Lawrence Wasden’s office investigated the companies for gouging customers during the coronavirus pandemic.
Jacksons Food Stores, Maverik and Stinker Stores weren’t investigated for increasing prices. Instead, they were accused of lowering prices at a slower pace than wholesale prices were falling as demand soured.
The retailers don’t want the state to do that to them again. A trade association that represents gas stations and convenience stores is pushing for the change in state law to prevent it.
The retailers found a friendly and bipartisan reception this week in the Idaho Senate. The Senate Commerce and Human Resources Committee voted unanimously to recommend that the Senate pass the bill, S1041.
But a deputy attorney general says the bill could invite price gouging during future emergencies.
Price-gouging would be considered only if prices rose
The bill would prohibit excessive or exorbitant price increases during an emergency such as the ongoing coronavirus pandemic declared by Gov. Brad Little in March. Under the state’s current emergency law, prices of gasoline, food, water and drugs could be considered excessive or exorbitant even if the price charged to customers did not rise.
Sen. Mary Souza, R-Coeur d’Alene, said at a committee hearing Tuesday that she doesn’t believe the language in the existing law is appropriate for determining whether price gouging was taking place.
Deputy Attorney General Brett DeLange, who heads the AG’s Consumer Protection Division, explained to the committee that his office looked at the difference between the wholesale and retail costs of gas over the past 14 years and how it increased during the early months of the pandemic. The difference, known as the margin, increased from an average of 10 cents per gallon to more than 60 cents, he said.
By March 23, the margin was more than 50 cents a gallon in Boise and more than 60 cents statewide, Wasden said in a March 24 letter to the Idaho Petroleum Marketers & Convenience Store Association. A few days later, it was 70 cents in Boise.
This came even as gas prices were falling. The Idaho average at the pump in February was $1.95 per gallon, followed by a 3-cent drop in March. By April, the average price fell to $1.45.
Souza and other senators said the focus on margins wasn’t enough. They said the Attorney General’s Office should have considered the drop in business the stores experienced and their capital costs in paying for their stores and underground gas tanks.
“There are many factors that have to be taken into consideration before we can come up with the idea or the conclusion that a certain person has been guilty of price-gouging,” Souza said.
The bill was introduced by Sen. Jim Guthrie, R-McCammon, at the request of the Idaho Petroleum Marketers and Convenience Store Association.
Ken McClure, a lobbyist for the association, said the emergency statute’s goal to prevent Idaho consumers from getting ripped off is laudable. But he said the application was misguided.
“It’s actually caused some problems, as it has been suggested that a price is exorbitant, even if it doesn’t go up during an emergency,” McClure told the committee. “This is kind of a head-scratcher to us.”
Price-gouging typically takes place when there is high demand for a product and low supply during an emergency, he said. “And that’s typically thought of as buying plywood as a hurricane approaches or selling a bottle of water for a huge increase in price,” he said.
Toilet paper price increases not covered
During the early months of the pandemic, stores across Idaho and the nation experienced a shortage of toilet paper, paper towels, hand sanitizer and sanitizing wipes. Prices climbed and stores placed limits on the stock they had. But those products were not covered by Idaho’s emergency price-gouging statute.
Convenience stores and gas stations remained opened as essential businesses. The businesses had added expenses for sanitation supplies, Plexiglas barriers and masks and other personal protection equipment.
“And you’re not selling any gasoline,” said McClure, an attorney with Givens Pursley. “Any business person knows that if your sales drop your income drops. And if you’re going to keep your business operating, you need to adjust your prices.”
Gasoline sales plummeted by 50% during the early months of the pandemic as workers were sent home and people stayed home, Charley Jones, president of Boise-based Stinker Stations, told the committee.
The problem, DeLange said, was that gas profits climbed to six times the average margin in the 14 years the Attorney General’s Office has monitored prices. They even exceeded the highest previous margin, 42 cents recorded in October 2008, he said.
The change in the emergency statute would be bad for Idaho, DeLange told the committee.
“They want to undo this so that if there is a next time, heaven forbid, they could proceed to do what present law does not allow them to do,” DeLange said. “That’s bad policy for the state, a bad outcome for citizens and businesses and an unwelcome, if perhaps unintended, invitation to future price gouging.”
Jones said he resented having the Attorney General’s Office target his company, owned by his family.
“Accusing Stinker of price gouging price gouging is an ugly term,” Jones said. “I was rightfully offended.”
Stinker, Jacksons and Maverik did not admit any wrongdoing in agreeing to the settlement, in which Jacksons and Maverik agreed to provide $600,000 each in gas discounts in 2021. Jones, whose company agreed to $300,000 in discounts, said he agreed to the settlement as a business decision.
“By agreeing to the settlement, we avoided a protracted legal battle with the Attorney General’s Office, whose resources are far more than mine,” he said. “And even if I was to win that argument, I’d lose because of the legal fees involved.”
During the early months of the pandemic, Jones said he worried he might lose his business. He told the committee that he has weathered the storm and that gas volumes are back to nearly what they were this time last year, before the pandemic began.
After the meeting, Jones said he feels confident the Legislature will approve the measure.
“I’m obviously more confident than I was” Tuesday morning, Jones said in a telephone interview. “Going forward, I think they understand the need for the change and that we’re being reasonable in our approach.”
In his testimony, DeLange noted that the Attorney General’s Office is the only entity that can take action against price-gouging allegations. The proposed change would make that statute worthless.
“The result of that would be simply to emasculate the law,” he said.
A Senate vote has not yet been scheduled.
This story was originally published February 3, 2021 at 2:13 PM.
