Soaring gas prices investigated

INDIANAPOLIS -- When rumors ran wild about gasoline prices soaring after the Sept. 11 terrorist attacks, Indiana was confronting something new.\n"It is a situation that we have not dealt with before. And by we, I mean our consumers and our station owners and employees," said Indiana Attorney General Steve Carter.\nIt's a situation the attorney general's office hasn't dealt with before, either, at least not in many years.\nAn investigation by Carter's office into possible price gouging when there was no fuel shortage has at least shed some light on the "gasoline scare" in the hours after the attacks.\nFirst, it wasn't nearly as widespread as the rumor mill suggested. Of more than 3,200 gasoline retailers in Indiana, only 86 were alleged to have raised prices above $2.50 per gallon -- the mark Carter's office deemed to be excessive under the uncertain circumstances of Sept. 11-12.\n"I am proud to say that the vast majority of Indiana's retail gasoline marketers responded to Tuesday's panic buying with price moderation," said Michael Pitts, executive director of the Indiana Petroleum Marketers and Convenience Store Association, in a Sept. 14 letter to newspaper editors.\nOf the 86 stations accused of passing the $2.50 mark, 43 have denied raising prices that high. Six have provided documents to prove it.\nThe "rumors" of soaring prices did have some basis in fact. Owners and operators of 39 stations confirmed raising prices above $2.50. Many of those have since offered refunds to customers.\nBut getting to the bottom of the situation is likely to prove elusive.\n"We really don't have one investigation, we've really got 86 at this point, so it's pretty complex to work through all the explanations," Carter said.\n"I think at some stations, the clerks have been told that when somebody else increases the price, you increase it also," Carter said. "Sometimes they're told, 'You go with whatever the guy across the street has.'"\nBut there were other reasons.\nRYEX, Inc., doing business as Hometown Express, took offense to a letter Carter's office sent requesting an explanation of why its station in Borden may have taken part in "unconscionable pricing" and "abhorrent price increases."\nIn a response letter to Carter, RYEX President Cary Ooley acknowledged that on Sept. 11 at about 5:30 p.m. and for about three hours, that station charged $2.99 per gallon for all grades of gasoline.\nThere were legitimate reasons for doing so, Ooley said in the letter.\nRYEX is a small, independent dealer that has a contract with one distributor, precluding it from buying fuel from anyone else, he said. The distributor called that day and said the station was scheduled for another fuel delivery on Sept. 13, but it was uncertain whether it would actually get the gasoline.\nAn inordinate number of motorists were lining up for gas, some filling multiple gas cans, and the station's supply was diminishing quickly.\nFearing that it might be without fuel for two or more days, which also would hurt sales associated with gas purchases, the station imposed a limit of five gallons per customer and later raised the price to $2.99 per gallon as an alternative to "simply closing our store," the letter said.\n"Quite frankly, closing seemed to be a dangerous alternative in terms of 'feeding' the frenzy by suggesting a shortage of fuel," it said.\nOoley said the "profit" the station realized from selling 700 gallons at $2.99 per gallon for a short period of time amounted to less than $1,000, and it didn't take into account the drive-offs they had or the "additional manpower to control the abnormal amount of irrational customers."\nRegardless, the station made a $1,200 donation to the American Red Cross, a decision Ooley said was made hours before it received Carter's letter.