Norwalk Connecticut Gas Station Settles on Charges of Sandy-Related Price Gouging

Michael Giberson

When it comes to gasoline price increases, how much do prices have to rise before a price increase is “unconscionably excessive”? What difference between prices before and after a declaration of emergency is large enough to create a “gross disparity”? Twenty percent? Ten percent? Five?

In Connecticut these days it looks like a mere 2.25 percent price increase after a big storm is a sufficient danger to the consuming public to invite the wrath of Conn.’s Department of Consumer Protection. As reported in a DCP press release:

A  Norwalk Shell gasoline station has signed an agreement with the Department of Consumer Protection and has paid $1,449 to the agency to settle allegations that the station raised its retail gas price by 10 cents per gallon on November 1, 2012, without there being a corresponding increase in wholesale gas prices for that day. The conduct occurred in the immediate aftermath of Storm Sandy. State law prohibits fuel suppliers from charging unconscionably excessive prices during times of abnormal market disruptions, such as storm-related disasters.

“Given that the state was in a period of abnormal market disruption due to the severe impact of Storm Sandy, we determined that the Shell station’s 10-cent per gallon increase was not justified and constituted an unconscionably excessive price for gasoline,” Consumer Protection Commissioner William M. Rubenstein said today.  “The retailer sold 4,830 gallons of gasoline that day at the increased price, but we are requiring him to disgorge three times the amount of that unfair profit.”

The Shell station is known as Connecticut Avenue Shell and is located at 307 Connecticut Avenue, Norwalk.  While the station does not admit to any wrongdoing, it entered into the agreement, which requires it to pay $1,449 to the Department of Consumer Protection for its complaint resolution, education and enforcement programs.

A newspaper account fills in some details: a few days after November 1 the newspaper observed that Connecticut Avenue Shell was charging $4.55 at a time when many stations in the area were charging between $3.95 and $4.05. (A check of connecticutgasprices.com supports the view that the station regularly charges higher prices than other stations in the area.)

Assuming the price was $4.45 for the days leading up to November 1, the 10-cent change constituted a 2.25 percent increase in the price charged for regular unleaded gasoline at the station.

No doubt the retailer concluded that $1,449 was less than its lawyers would have charged to fight the allegation, and so it took the commercially expedient route of settling with the state. Still, the settlement puts a pretty tight cap on future retailers who may wish to raise prices during times the state has asserted a market disruption.