Mich. gas stations sign deals after gouging claims

LANSING, Mich. - Eleven Michigan gas stations have signed deals with the state to settle allegations that they gouged drivers by raising gas prices to $5 a gallon during a hurricane last year, Attorney General Mike Cox said Friday.

Gas at the stations located mostly in the Lansing area ranged from $4.99 to $5.39 a gallon when Hurricane Ike made landfall near major oil facilities in Texas on Sept. 12, 2008. The statewide average that day was below $4.

Cox said the compliance agreements filed in Ingham County Circuit Court "send a warning that gouging will not be tolerated." He said the stations used "questionable" pricing practices.

Four stations paid fines of $456 to $1,320, equal to the profits they made from the temporary price spikes on Sept. 12. Another station voluntarily provided refunds to motorists. Fines were assessed in instances where investigators could clearly identify that profits were made, Cox spokesman John Sellek said.

Muhmmad Jat, who runs a Lansing Sunoco station where the price reportedly reached $4.99, said he raised the price for 1 1/2 hours after getting a fax from a wholesaler saying prices were rising. He said there had been a "misunderstanding" with the wholesaler, however, and he dropped his price as a result and later paid the fine.

The 11 stations included three Sunocos, three Marathons, two Citgos, a BP, a Clark and Clare Shop and Go.

Gouging can be difficult to prove, making Friday's announcement a rarity. The state worked out the deals instead of filing suit because the "end result isn't guaranteed" in court, Sellek said.

In 2001, then-Attorney General Jennifer Granholm took action against 48 service stations that raised prices sharply in the days after the Sept. 11 attacks. The stations were required to refund more than $100,000 in overcharges to consumers and to pay about $30,000 in civil penalties to the state.

By signing compliance agreements, the stations agreed to promptly turn over documents in the future and stop raising prices in response to consumers' panic unless it can be justified by billing records.

Sellek said the attorney general's office received hundreds of calls last September but could pursue cases only where people had "hard evidence" such as receipts.

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