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Printed from the Charlotte Observer - www.CharlotteObserver.com
Posted: Saturday, Sep. 13, 2008

A range of questions amid fuel disruption

By Kirsten Valle
Published in: Local News

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With Hurricane Ike set to make landfall early today in Texas and gas prices jumping, people are wondering what's behind the increase. Here's the rundown of how gas gets to the pumps, what sends prices up and why you shouldn't rush out to top off your tank.

Q: Why are gas prices rising so suddenly?

Gas retailers determine the price based on what they pay wholesale. Wholesale prices have jumped recently because some Gulf Coast refineries and rigs have shut down in anticipation of the hurricane. On Friday, wholesale prices for N.C. retailers ranged from $3.98 to $5.22 per gallon, said Frank McNeill Jr., president of McNeill Oil Co. in Aberdeen and a board member of the N.C. Petroleum & Convenience Marketers Association.

That has caused retailers to raise their prices. Some have begun to raise prices in anticipation of their next shipments costing more, too, meaning prices could be higher at stations with a lower supply.

Q: Is this price gouging?

Price gouging, charging unreasonably high prices in times of crisis, is illegal in North Carolina during a disaster, emergency or “abnormal market disruption.” In most cases, what's happening this week in Charlotte is probably not price gouging, but rather a response to higher wholesale prices, said Carol Gifford of AAA Carolinas. The different prices retailers pay can lead to the disparity at different pumps.

Q: What's being done to fight price gouging?

In 2006, N.C. lawmakers strengthened the price gouging law. Friday morning, Gov. Mike Easley declared a state of “abnormal market disruption” for the first time since the new law was passed. That charges the attorney general with enforcing the price-gouging statute.

By Friday afternoon, the N.C. Attorney General's office had gotten more than 425 inquiries about price gouging, spokeswoman Jennifer Canada said. The attorney general's office can investigate potential price gouging, seek refunds for consumers and seek civil penalties of up to $5,000 for each violation.

Q: Should I be worried about the supply of gas?

Suppliers are limiting their shipments to gas stations as a precaution, Gifford said. Across the Charlotte area on Friday, some stations were already out of gas. Others were reporting long lines as consumers raced to top off their tanks.

“We'll probably be out of gas by (Saturday) afternoon,” said Greg Ryback, a mechanic at a BP at Sharon Amity and Randolph roads. “We're not going to get another truck until Tuesday.”

After Hurricane Katrina in 2005, 20 percent of Mecklenburg's gas stations closed, and dozens more were shut down around the region after running out of gas.

Gifford of AAA said there's not a shortage of oil nationwide. “It's not a question of supply, just a temporary disruption,” she said.

Q: Should I fill up my tank?

If you need to fill up, be prepared for a wait and higher prices. Experts are encouraging motorists to conserve their fuel as long as they can to make sure gas stations can weather the storm.

Kirsten Valle: 704-358-5248

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