For a while now Exxon-Mobil Corporation has been seeking clarification from the State of Florida, Department of Agriculture and Consumer Services (DACS) on just how the state’s price gouging law is applied. (Some background in this post from a year ago.) The company wants to know what it needs to do to comply with the law, or possibly, if the burden of the law will be excessive, whether it should exit the state. The Florida DACS refused to answer Exxon’s request at first, citing procedural grounds, but on review a court has directed the agency to answer two questions: (1) whether the law applies to wholesale exchange, and (2) whether a regional price index is sufficient to reflect national or international trends in prices.
Florida’s price gouging law seeks to prohibit charging a price that “represents a gross disparity between the price of the commodity … and the average price at which that commodity … was rented, leased, sold, or offered for rent or sale in the usual course of business during the 30 days immediately prior to a declaration of a state of emergency, and the increase in the amount charged is not attributable to increased costs [due to] … national or international market trends.”
Historically the law has been enforced against retailers, but at least since receipt of investigatory subpoenas from DACS last year Exxon has been interested in how the law may be applied to wholesalers. In addition, Exxon stated in its request to DACS that traditionally it has relied upon the Gulf Coast Regional Platts Index as a guide to changing costs, but it wonders whether or not this regional index can be taken to reflect “national or international market trends.”
State price gouging laws frequently employ language prohibiting “unconscionable” or “grossly excessive” price increases, and only sometimes do the laws clarify the distinction between price increases that are grossly excessive and price increases which are merely excessive under the law. So far the Florida DACS has been unwilling to clarify how the law may apply to Exxon and other wholesale marketers, but with the recent court decision at least some greater clarity should emerge.