Price Gouging Worries in the Aftermath of Mid-atlantic Thunderstorms, Power Outages

Michael Giberson

The thunderstorms that tore up the Mid-Atlantic at the end of June left many thousands of people without power, sometimes for several days, during some unusually hot early summer weather. Among other things, the aftermath has been filled with price gouging complaints directed at hotels, gasoline stations, and retailers selling ice (and another).

Maryland doesn’t have an anti-price gouging law, while most states surrounding it do. It would be interesting to see if the prices of any of these items jumped more or less in Maryland as compared to neighboring states. While the state doesn’t have an anti-price gouging law, the Maryland Attorney General is encouraging consumers to report and send documentation concerning any storm-related price complaints. The AG explains that the office has supported legislation to gain the office price gouging authority, and any complaints it accumulates can help it lobby the state legislature.

Surprisingly, this post-storm story published two days later in the same publication doesn’t mention price gouging, though it does mention some price increases: “Customers Rush Gas Stations Following Storm.” Here are some excerpts:

Friday night’s storm affected Maryland residents and business owners in different ways, but just about everyone felt the need to get a full tank of gas.

Over the weekend, gas stations that had power were flooded with cars looking for both gas and ice.

Jim Kurtz, the owner of a Takoma Park Shell station on New Hampshire Avenue, said his station saw a tremendous increase in drivers looking to get gas on Saturday and Sunday.

“We had lines down the street all day Saturday and Sunday,” he said. “We usually use around four tankers of gas (8,800 gallons each) during the week, and last week we used six.”

Kurtz said the station ran out of gas on Saturday by around 6 p.m., was refueled Sunday morning and ran out again by Sunday night.

He says he has no idea what causes the rush to fill up, attributing the panic to human nature. Kurtz added that he had heard of some people, including one of his managers, sleeping in their cars with the air conditioning running to avoid the heat.

As the story mentions below, the Takoma Park Shell station reported not raising prices after the storm, and perhaps not surprisingly the station twice ran out of gasoline.

The Liberty station has not had electricity since Friday night …. “We’ve probably lost between $40,000 and $60,000 in the past four days,” [station owner Mario Bruno] said.

Bruno added that if Pepco’s predictions that the outages could take until Friday to fix turn out to be correct, the station will lose more than $60,000 between the loss of gas, convenience store and automobile repair sales.

If that is “between $40,000 and $60,000” in profit, it would have paid to have a backup power system. Likely he’s talking revenue, so the profit number is significantly less. Still it seems like a portable power generator might be a worthwhile investment. In some states passing along the cost of renting a temporary power generator in higher gasoline prices might just get you in trouble for price gouging – most state’s are not too clear on what kinds of costs, if any, are accepted by state law and which are not.

Some stations in the area used the demand for gas to increase their prices.

Steve Lapkoff, the owner of a BP station on Old Georgetown Road, said the company had requested that its stations increase their prices by $.05 on July 2. His station was closed on Monday due to the power outage, so he said he raised them on Tuesday.

Lapkoff said he isn’t in charge of gas prices, but he added that if he were, he would have raised them to benefit from the demand.

Kurtz said he did not increase his station’s prices.

However, he explained that Shell raised its rack price, which is the price at which refineries sell gas to wholesale locations like his Takoma Park station. The price increased by $0.10 on Friday evening and came back down on Monday, he said.

Regardless of the increase, Kurtz says the station saw “super mayhem” on Friday evening and Saturday morning, and it continued to have long lines until there was no more gas.

“Super mayhem?” In Takoma Park, Maryland? Seems unlikely.

ELSEWHERE: They need a law to do that? According to the Asbury Park Press Capitol Quickies blog:  “[NJ Attorney General Jeffrey S. Chiesa] pointed out that the state has a price-gouging law to increase prices excessively during a declared state of emergency or for 30 days following the termination of the state of emergency.”