Gas price gouging on rise*

Michael Giberson

Gasoline stations are violating price regulations at a higher rate than any other industry under government price guidelines, an Internal Revenue Service survey shows.

About 20% of service stations checked were selling gasoline above the legal ceiling price, the agency said.

Federal energy chief William Simon told The Milwaukee Journal’s Washington Bureau Thursday that the Internal Revenue Service was intensifying its crackdown on price gouging. He said the IRS was training an additional 1,000 investigators – bringing the total number available to the Federal Energy Office (FEO) to about 2,500.

In addition, he urged consumers to complain to their local IRS office whenever they believed they were being overcharged. He said consumers should get receipts from service stations whenever possible so they could receive any refunds that were ordered.

Acting Atty. Gen. Robert Bork sent telegrams to 94 US attorneys last week advising them to seek restraining orders against gasoline price gouging, Simon said.

Most of the violation probably do not involve flagrant price gouging, in which motorists are charged $1 or more for a gallon of gas, an IRS spokesman said. But the number of such serious violations is increasing.

The spokesman said it appeared that an increasing number of gasoline stations were using various gimmicks to get around the government’s price regulations.

*Excerpt from “Gas Price Gouging on Rise,” The Milwaukee Journal, January 2, 1974.

You probably believe that consumers had to wait in long lines to buy gas in the early 1970s because of the OPEC oil embargo. Annual data on imports available from the Energy Information Administration indicate that oil imports from OPEC nations increased each year from 1968 through 1977. (I don’t find monthly data on a cursory search, though it would be more revealing of conditions during the months of the embargo.)

The newspaper clip above reminds us that U.S. government price controls were hampering oil industry adjustments to higher world oil prices and changing supply conditions. A little common sense is all that is needed to realize that consumers don’t stand in line to pay too-high prices, but will stand in line for underpriced goods (whether due to sales promotions or government price controls).

A related story, “Gas stations worst violators” (The Miami News, January 3, 1974), elaborated on gasoline retailers’ adaptations to price controls: “According to the [Federal Energy Office] spokesman, the gimmicks used include service charges for each gallon of gas, requiring consumers to get a car wash along with a full tank of gas, or making them buy other products at inflated prices.”

The rest of The Milwaukee Journal story is included in the continuation below.

During the four day New Year’s weekend, the IRS found that 409 of 2,346 service stations were violating legal selling prices.

The number of complaints flowing into IRS offices from motorists alleging price gouging also is increasing. Last weekend, IRS offices remaining open for the holidays received more than 3,500 calls. During Christmas week, the IRS received nearly 1,200 complaints.

The government Wednesday sued Chicago service station operator Sam McBride for at least $2,500 for violations of federal gasoline price guidelines. It was the first such action by the federal government.

Meanwhile, gasoline prices went up to more than 50 cents a gallon Thursday in many areas of the country.

Effective at midnight, Amoco, the marketing and refining branch of Standard Oil Co. of Indiana, raised its wholesale gasoline price 5.9 cents a gallon and its No. 2 home heating oil 6.4 cents a gallon.

Standard Oil of Ohio (Sohio, Boron and BP) also raised its gasoline price 1 cent a gallon and diesel fuel by 4 cents a gallon.

The increase, which Amoco said was with Cost of Living Council guidelines allowing higher raw material prices to be passed on to consumers, drove the cost of premium gasoline at the pump to 56.8 cents a gallon in Chicago and 57.9 at some Washington (D.C.) stations.

Sun Oil, meanwhile, denied Wednesday that it was guilty of price gouging. The company made the comment in Philadelphia after the Federal Energy Office said it was investigating charges by Northeast Petroleum of BNoston and Northville Industries of Melville, N.Y., that Sun set grossly inflated prices for heating oil.

“The key to the transaction is that this was a sale from Puerto Rico Sun Oil, which operates out of Puerto Rico and is not subject to Cost of Living Council price regulations,” a Sun spokesman said.

In another development, a spokesman for Indiana and Illinois gasoline retailers said Wednesday that reduced gasoline supplies could result in the closing of as many as half the gasoline stations in the nation during the last few days of January.

Robert Jacobs, secretary-treasurer of the Illinois Gasoline Dealers’ Association and executive director of a similar Indiana association, said dealers had been allotted 20% less gasoline for January. He predicted that there probably would be a free market for the first three weeks of the month.

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