By Andrew J. Hawkins, Crain News Service
NEW YORK (May 3, 2013) — Some 25 New York regional gas stations settled claims worth $167,850 that they engaged in price gouging in the aftermath of Superstorm Sandy, Attorney General Eric Schneiderman announced May 2.
The state filed lawsuits against four other gas stations that have declined to settle claims. And investigations are pending against more than a dozen other gas stations.
"People give in to their lesser selves," Mr. Schneiderman said at a press conference announcing the settlements on the East River waterfront in midtown. "This is just the first step in making sure people have the message: If you try it, we will pursue you, and we will get you."
Two of the gas stations that settled with the state are located in the five boroughs—one in Greenpoint, Brooklyn, and other in Long Island City, Queens,—with the rest hailing from Long Island, Rockland and Westchester. Of the four stations cited in the lawsuit, one is based in Brooklyn and the rest on Long Island.
In the days after the storm, New York saw some of the largest jumps in gas prices in state history, Mr. Schneiderman said. Offending businesses were found to have jacked up the retail price of gasoline during the storm by 27 percent or more. The most egregious case was of an Alliance Energy/Lukoil station on Pelham Parkway in the Bronx, where prices rose 135 percent over wholesale prices to $5.39-a-gallon in the days following the Oct. 29 storm.
"After the storm come the vultures," said state Sen. Brad Hoylman. "And that's exactly what happened here."
Taxi and livery cab drivers who had to pick up the slack from a shuttered public transit system were hit especially hard by inflated gas prices. In turn, many drivers forwarded complaints to law enforcement officials, serving as "the best source of tips" of price gouging during the storm, the attorney general said.
Gas station owners were given the opportunity to present evidence of increased cost of doing business during the storm to the attorney general's investigators. Many stations lost power during the storm, including the Buckeye Pipeline and several key fuel terminals. Some gas stations had to hire additional employees to meet the demand of long lines and a shortage of gas.
"Validated cost increases" to cover storm-related expenses were taken into account, Mr. Schneiderman said.
Mr. Schneiderman dismissed complaints from some gas station owners of excessive bullying by his office over price-gouging claims. Some owners have reportedly said that it was less costly to settle the charges than fight them. Ultimately, the attorney general extracted settlements averaging just $6,700 per station, which is a pittance compared to what it would have cost the businesses to litigate.
Generally, when attorney generals hold press conferences to announce settlements, the dollar amounts are in the millions, if not tens of millions. And it's possible that Mr. Schneiderman invested more public resources in the investigation than he recovered. But price-gouging during a post-hurricane gasoline shortage is illegal, as well as a topic that figures to grab the public's attention.
"Gas prices don't lie," Mr. Schneiderman said. "Everyone we brought an action against could not defend the unconscionable increase in their gas prices."
This report appeared on the website of Crain's New York Business magazine, a sister publication of Tire Business.