California wants any price gouging law to cover US refiners

Washington (Platts)--14Mar2006

Any effort to legislate against gasoline price gouging must encompass refiners, not just retailers, California's Chief Attorney General Thomas Greene will tell the US Senate Judiciary Committee Tuesday, according to prepared testimony.

Greene, who is due to speak at a Senate hearing on oil industry consolidation which will feature testimony from top executives of six of the nation's largest oil companies, will say his belief that refiners must be included in any law comes from California's experience.

California law, unlike federal law, prohibits price-gouging of gasoline. Under the state's law, which applies to "essential consumer goods and services," the law is triggered if price increase more than 10% after a declaration of an emergency, Greene will explain.

But high prices are not unlawful if a person can prove that the price increase is "directly attributable to additional costs imposed on it by the suppliers of the goods," he will note.

After Hurricane Katrina, California received a flood of complaints about dramatically higher gasoline prices, Greene will say. Consumers were particularly concerned because Gulf refineries did not supply Californian gasoline stations except in very rare circumstances.

Greene will say California investigated dozens of the "most egregious complaints" and learned that the prices had spiked not because of the retailers that were covered by the state law, but by refiners, that were not.

"In considering new legislation, it is imperative to include refiners with its purview if it is to be effective," Greene will say. --Cathy Landry, cathy_landry@platts.com

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