Attorney General Jack Conway announced that his Office of Consumer Protection is launching an investigation into abnormally high gas prices in Louisville.
“When market participants and experts are telling us this is unusual; when Louisville consumers are paying some of the highest prices for gasoline in the region, I feel it is imperative to find out if those prices are simply a function of the market or if something unlawful is taking place to manipulate prices,” General Conway said.
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Gas prices in Louisville are currently averaging almost $4.30 per gallon, almost
30 cents more per gallon than other parts of the state.
Louisville retailers are required to fill their stations with reformulated gas (RFG) during the summer months because of an agreement with the U.S. Environmental Protection Agency to meet federal air-quality standards. Northern Kentucky retailers must also stock their stations with RFG as part of a similar agreement, but retail prices in that part of the state are about 18 cents per gallon less than Louisville. Regionally, St. Louis must also use RFG and retail prices there are averaging $3.80 to $3.90 per gallon.
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According to industry experts, RFG is more expensive to produce, but only 5 to 8 cents per gallon more than conventional gasoline. Retailers in Louisville report that they are paying wholesalers 20 to 25 cents more per gallon for RFG when compared to conventional gas.
“Our investigators have been told by various market participants and government officials that these gas prices are abnormally high relative to other markets, so I feel it is in the public interest to determine if a violation of the Consumer Protection Act has occurred, why prices are higher in Louisville and whether any laws have been violated,” General Conway said.
The Attorney General’s Office is currently compiling and reviewing data from industry sources, commercial agencies and the Kentucky Division of Air Quality. Investigators will be looking for trends that may indicate whether any violations of the Consumer Protection Act or state anti-trust laws may have been committed.
Under the Consumer Protection Act (KRS 367.240-250), if the Attorney General believes that the law has been or may be violated, or that it is in the public interest to determine whether a violation has or may occur, he may issue subpoenas and/or civil investigative demands to wholesalers operating in Louisville.
“The Consumer Protection Act prohibits ‘unfair, false, misleading or deceptive acts or practices’, and I will be determining whether any such acts occurred,” General Conway said.
The Consumer Protection Act and anti-trust statutes provide for injunctive relief, as well as restitution and civil penalties.
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