With a new hurricane brewing in the Gulf of Mexico and gas prices likely to soar again at the pump, federal and state officials have lined up to join a new crusade against price gougers.
The problem is that legal tools to go after oil companies and gas station owners are limited.
More than 26,000 consumers have registered complaints with the U.S. Energy Department, though there are no federal laws that make price gouging illegal, according to the department and the Federal Trade Commission.
Several state attorneys general, including those in the District, Maryland and Virginia, have launched their own investigations into price gouging based on complaints from consumers, though Maryland does not have an anti-gouging law either.
The FTC -- the federal agency that regulates fair competition within the oil industry -- said this week that it has launched an investigation into the issue and will submit a report to Congress, as required by the recently passed energy bill. "It is sort of like, I know it when I see it," said John H. Seesel, the agency's associate general counsel for energy. "It's very difficult to define."
If the FTC finds evidence of price gouging, it can take action only if companies are colluding with one another to set prices. "It's not illegal for an individual merchant to set a price at whatever level he or she wants," Seesel said, "as long as that particular individual didn't conspire or collude" with competitors.
Several bills before Congress call for more specific anti-gouging measures to be considered. Last week the Senate passed an amendment to an appropriations bill that would require the FTC to investigate unfair practices at the pump. "Everyone wants to know why -- why are gas prices so high?" said Sen. Mark Pryor (D-Ark.), one of the sponsors, in a taped statement, noting what he called the curious connection between the high prices at the pump and the high profits of oil companies.
A group of eight Democratic governors called upon President Bush and Congress to investigate "excessive profits being made by oil companies" that may be taking advantage of the natural disaster.
Virginia Attorney General Judith W. Jagdmann is investigating five incidents reported by the state's Agriculture and Consumer Services Department about alleged price-gouging incidents. One unidentified gas station in Centreville has been cited for charging prices that consumers said reached more than $5 a gallon for regular after Hurricane Katrina hit the Gulf Coast.
In Virginia, violators face civil penalties of up to $2,500 per violation. Unlike the federal government, Virginia can investigate a company that sells "necessary goods and services at an unconscionable price" in the wake of a natural disaster or a "state of emergency." Even though the hurricane did not hit Virginia directly, Gov. Mark R. Warner (D) declared a state emergency so that the price-gouging laws would apply.
In the District, similar consumer protection laws make it illegal for a company to require an "unconscionable sales term," which the D.C. attorney general, Robert J. Spagnoletti, defines as being egregiously higher than the rest of the country, according to spokeswoman Traci L. Hughes. "We're closely observing whether or not there are any unconscionable gas prices taking place," she said. "We have not initiated any formal investigations." Price gougers in the District face $1,000 in civil penalties per incident, which Hughes said could be interpreted to apply to every affected customer.
Maryland does not have price-gouging laws that take effect after a natural disaster, but Attorney General J. Joseph Curran Jr. has announced a broad "investigation" into the recent spike in gas prices, spokeswoman Jamie St. Onge said.
"We can assure you we are moving forward with gathering information . . . in collaboration with attorneys general around the country and that we will use all tools available to us, including subpoenas, to try and get answers to nagging questions about gas prices," she said.