So Granholm/Cox, if someone found a station gouging…

Last time I called the Michigan AG on gas price gouging, I was given sympathy “Oh, I know its terrible, isn’t it?”, I had accurate information, the station address, and NOTHING WAS DONE. No questions asked, no investigation, no taking of my name and information, no taking of the other information I had as well.

Will the State of Michigan to do something about this station that a GasBuddy took a photo of on Sept. 11 in Lansing? The station turned off their sign once camera crews arrived, but here it is. The GasBuddy managed to get a photo of it. Now- let me guess. The State says they’re interesting in prosecuting stations that gouge, but they’ll likely say I had to fill up with the ultra expensive gas to prove it. Why waste my money and support the morons that did this? Shouldn’t a photo be enough to prosecute?

Lets see if any local media stations will pick up on this ridiculous station’s attempt to gouge. If you can’t see the image well enough, the price for regular is $6.55. The station claims a malfunction, but I don’t see how you can screw this one up. Its not like they meant $3.55, that would be too cheap. $4.55 would be gouging as well… so $6.55?

OK, State of Michigan- you advertise that you’ll protect the consumer and prosecute stations that gouge, so here you are. If anyone has a receipt showing purchase of fuel in the West Michigan/Lansing area on Sept. 11-13 that is over $5 gallon, I will personally give you $50 for it’s use.


Updated: September 14, 2008 — 1:53 pm

20 Comments

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  1. But $3.39 & $3.49….NOT gouging right?

    Maybe they should investigate Brenner, Lemmon, J&H and the like as well.

    The people of Michigan deserve exactly what they get for re-electing Granholm & Cox.

    Nothing.

  2. Last time I checked:

    1. Dramatically tightened supply

    +

    2. Dramatically increased demand (aka panic buying)

    = Rising prices.

    I don’t like the high prices anymore than anyone else. But what are they supposed to do? If they keep their prices too low, their tanks will run dry, like the Sam’s Club on Alpine in GR did Friday night.

    Why exactly is it so bad that a company will try to get as much profit as possible? If there was suddenly a disease outbreak amongst dairy cattle and milk became scarce, does anyone really believe that milk wouldn’t go from $3/gal to $5 or more? Is that gouging?

    Can anyone actually define gouging? Other than the de facto “it’s higher than I like so that must mean Big Oil is gouging me?”

    Rising prices are the best way to ration an item. That way, the people who really need the item obtain it and folks who can wait, do.

  3. Edit: Prices should be $4.39 & 4.49 per lansinggasprices.com

    Lansing? Isn’t where the politicians are?

  4. Occasus are you an idiot you must not read this blog and follow the number’s and how they got to where they are and how and compare it to milk we have other option’s when it come’s to milk trust me i’m a cook and other dairy product’s and $6.55 is gouging and it’s not the big oil companies doing it if you wanna read up on that go back on the archives on this site

  5. http://gaswatch.energy.gov/

    Is $4.29/gal for regular gouging? This is in the Grand Rapids, Michigan area. Thanks!!

  6. Figures, $4.39 and $4.49 is borderline. It certainly isn’t as bad as $6.55, wouldn’t you say?

    $4.29 right now is not gouging. Wholesale prices are currently around $4.19.

    Occasus, you seem quite out of touch with this whole subject. $6.55 is WAY OVERKILL, wouldn’t you say? Did you read the post?

    And no, I can’t “define” gouging. I’ve been kind of hoping the State would define it so it’s black and white. Right now its all gray area.

    I agree with most your post, but $6.55 is a joke.

  7. @gotbeer: I read this site everyday and subscribe to the email list and the RSS feed, so I’m pretty sure I’m up to speed on how the prices are set.

    I’ll repeat: Please define gouging for me. Two years ago, when gas was selling for about $2.30/gal (according to the charts we’d have said $3 gas was gouging. Now we say $5 gas is gouging. It sure seems like a lot of people are using the “it’s more than I want to pay, therefore it’s gouging” definition.

    @Patrick: Yes, I agree $6.55 is overkill. The solution is pretty simple: don’t buy gas from that station. If enough people skip filling up there, they’ll lower their price until they start making sales. If you’re stupid enough to buy gas at that price, it’s your own fault. (Think of all the Rent-to-Own companies out there – you effectively pay for an item several times over by the time you’re done. Why isn’t that gouging?)

    It’s not the oil/gas companies fault that so many of us made the foolish decision to be at their complete mercy. Move closer to your work. Take the bus. Change jobs if your’s requires too much driving. Heck, buy stock in Exxon and at least get some of your money back.

    Is the oil/gas industry is supposed to be some sort of a Good Samaritan and provide us with unlimited amounts of cheap fuel?

  8. I think the requirement that you have to buy the gas in order to establish “gouging” makes some sense. If all the station does is post a price, no one has actually been harmed by the higher posted price. Once someone pays the higher price, then harm has occurred, and you can prosecute for gouging. That presumes, of course, that someone can figure out the line between a high price and gouging.

  9. I would like to know why diesel prices have been largely unaffected by this? I can still get diesel for $4.11/gal same price as it was before all this hurricane stuff happened. As of this morning I haven’t see any gas stations raise their price of diesel. So why the difference??

  10. The retail stations are the end sellers of product

    The big Oil sell their product based mostly on the NYMEX

    With the prices going up on Friday because of the hurricane and the speculators on NYMEX,
    Big Oil then increase the price they sell to the wholesalers

    The wholesalers have to increase the price they sell to the retailers

    Retailers usually have only two days supply in their tanks

    So the retailers have to increase their price because their costs have gone up

    Don’t blame the retailers or the wholesalers

  11. I just wanted to say that you shouldn’t assume that the price on the sign is the price that they are selling it for. By law, we can’t have a higher price at the pump then we have on the sign, but there is nothing stopping stations from posting a higher price on the sign and under charging.

    It is possible that their sign was messed up. We had problems with one a couple weeks ago and and it was putting random numbers up when we sent the price, luckily we were only changing the last digit.

    It is also possible that they were posting a high enough price to stop demand. On Friday we had to raise our prices from $3.899 to $3.999 at 4pm to attempt to stop stores from running out. But our lines went from 15 cars deep to 10 after. Stores that were at $4.199 weren’t empty either. I could see someone that was getting low posting a high price to make sure that they still had something to sell the next day.

    I agree with the State that you need to have a receipt, taking a picture of the sign or even the pump (we’ve had displays go bad and get stuck on the wrong price) doesn’t prove anything. Regardless of if it was intentional or not, that station shouldn’t be punished if they were really selling gas for $3.999. If that was the correct price, that’s another story. But there still isn’t a gouging law that the State could enforce.

    You don’t have to buy 10 gallons to get a receipt to prove the price. Just a drop of gas will give you a receipt with the price per gal on it.

    Glenn is correct about wholesalers and retailers not having any control over what price that we pay the oil companies for. We have no choice but to pass on any increases that we get.

    John: Diesel wholesale prices have already been artificially inflated due to the huge demand in Europe. They use a lot higher percentage of Diesel over gas in a lot of places compared to the US. The refineries have very little adjustment in how much of each product that they can make from a barrel of crude.

    So we ship them diesel and they ship us gas. But the demand has been so strong over there that the oil companies can make a ton of money for any diesel that gets shipped over. So, they want to make good profit on anything they decide to leave here. Right now, nothing is getting shipped over to Europe, so there is some extra diesel. But, we did get an increase on Friday (I think it was 15 cents). So, retail prices will be going up some more.

  12. Was on my way to Traverse City and found a Marathon station in Cadillac that was $3.89 for regular. Topped off and on my way back from T.C. I topped off again..

  13. While listening to the Republican convention on the radio driving back from the UP I heard the crowds chanting, “drill baby drill”.. With hurricanes intensifying in strength and numbers causing greater threats and damage to the offshore oil rigs why are the Republican’s pushing for even more offshore drilling??

  14. First, we’re not technically concerned about gouging, which happens during a declared emergency. The issue is profiteering, whether by the oil companies, the wholesalers, or the retailers.

    Second, government doesn’t care about us. Don’t hold your breath for Cox to take action. I live in the Detroit area and work in Lansing. Routinely, the price of gas goes up on Thursday afternoon in Lansing, but not around Detroit. I’ve pointed that out, with specific examples, to both the AG’s office and the Department of Agriculture, which is supposed to regulate those things. Neither agency responded to emails.

    Third, there’s no shortage of gasoline, so why the price hike? If stations didn’t raise the price, consumers wouldn’t panic and start a over-buying. (Why do they do that anyway? It’s not like the end of the world is right around the corner. And most typical price hikes are 20-30 cents anyway, so how is this any different?) In the Detroit area, I’ve not seen any lines at stations, but the price is up 30-60 cents per gallon. If the supply is still there and the demand is the same, profiteering is the only explanation. Next week, when supply might be down because of the refinery interruptions, a increased prices might make sense, but not now. Any bets we see another jump in prices next week, too?

    Fourth, I usually blame the oil companies for the obscene price hikes, and then the distributors. I’m sympathetic that station operators have a very small margin in the overall price of gas. I believe that’s part of why all filling stations in a given area have the same price–it’s set by the oil companies and/or distributors. How come no one can ever prove collusion here? Does all gas in Lansing suddenly jump a quarter on Thursday afternoon, regardless of brand? Why is that?

    But, when individual stations (or brands) are noticeably different from others, then the profiteer is obviously the operator. Kind of like the Exxon station charging $4.199 per gallon yesterday, compared to the Mobil across the street at $3.999. In theory, they’re the same company, getting their supply from the same wholesaler at the same price! Yet one is 20 cents per gallon higher. The $6.55 BP station in the picture is in the “rape your neighbor” category. Where was this station so we can all never go there. I don’t care if their sign “malfunctioned.”

    @Occasus
    It’s not a supply and demand issue yet. It’s profiteering, plain and simple. I can see a dime or so because of Gustav, but nothing from Ike should affect our gas prices until next week. The only real issue is at what point(s) the profiteering is taking place.

    Also, this is Michigan, where former Gov. Engler vetoed legislation to support mass transit in the last minutes before he left office, the two-faced fat pig! So, Detroit is the only major city in the US without any public transit beyond an incompetent bus system. Even frickin’ LA, with it’s massive freeway system and love of cars has rapid transit! The bus is not a legitimate option for most people. And, in case you haven’t noticed, the housing market is severely depressed, especially in Michigan. So moving closer to work is not a likely probability for most people. Is your head in some kind of hole in the sand, you ostrich?

    @Figures
    Yeah, the politicians are in Lansing. That’s why I’m surprised they don’t see the same funny business every Thursday afternoon the rest of us see.

    @retailer
    Do you have a source for your information on sending diesel fuel to Europe in exchange for gasoline? That’s the first time I’ve heard that as an explanation for high diesel costs. I’m intrigued.

  15. Cynical Synapse:

    I’m not going to go into everything, but I wanted to say a few things. I’ve posted about the whole thing with everyone going up at once a million times (I think one was last week if you want to look) and don’t feel like doing it again right now. But, every single time prices have went up has been because of retail prices being near or below cost. Speedway proved on Friday why it doesn’t work why other people go up first. I also explained a week or so ago that you can’t compare Detroit prices to the rest of the State.

    I’m not sure why you think there isn’t a shortage, but there is. You can’t shut down 25% of production without causing a shortage. The only question is how long it will last. If the info Patrick was finding on the lack of refinery status is correct, then it shouldn’t take very long to smooth things out.

    Stations raised prices based on wholesale price increases of 40+ cents in a few days. The panic came from irresponsible radio stations spreading rumors of $5.299 – $6.009 in towns that were really in the $3.899 – $3.999 range. If you didn’t see lines, its because the rumors didn’t make it there. By 3 on Friday, every gas pump in my town had at least 10 cars in line.

    My company is both a distributor and a retailer, and as a distributor (just like everyone else) all we do is pass on the changes we get from the oil companies along with our markup. I can assure you that the distributor’s profit is even smaller than the retailer.

    Here is a couple links to info on Diesel prices:
    http://www.eia.doe.gov/bookshelf/brochures/diesel/index.html
    http://answers.yahoo.com/question/index?qid=20080723141656AABb9KZ

  16. I wanted to know why this hurricane did affect diesel prices, not why it can be more expensive than gas. As far as I can tell then #1 factor in determining the price of diesel is supply vs demand, well we shut of roughly 25% of the supply and it caused gas to spike in price, why not diesel? Doesn’t the supply reduction of 25% also effect the supply and manufacturing of diesel as well?

  17. John: I guess what I was trying to explain is that the hurricanes caused a surplus of Diesel because the oil companies haven’t been able to ship any to Europe for over 2 weeks. So that combined with the prices already being too high like I explained before, made it so there wasn’t any need for Diesel wholesale prices to go up.

    But, they did go up about 18 cents Friday night. Retail margins for Diesel were also on the high side before the hurricanes, so you might not see an increase at the pump. In my opinion, there isn’t any reason for stations to be above $4. 259 or below $4.189 today. Unless their cost is higher than what ours is today.

  18. @Cynical Synapse: You said:
    It’s not a supply and demand issue yet. It’s profiteering, plain and simple. I can see a dime or so because of Gustav, but nothing from Ike should affect our gas prices until next week. The only real issue is at what point(s) the profiteering is taking place.

    I’d like to know if there is something inherently immoral about a company profiting off a fortunate situation? Exxon is making 8% profit. The corner gas station makes 15-20¢ per gallon. At least they are providing us with a useful and necessary product. In fact, here’s a great quote from Exxon’s CEO when he was interviewed on ABC a few weeks back:

    “I saw someone characterize our profits the other day in terms of $1,400 in profit per second,” Tillerson told Gibson.

    “Well, they also need to understand we paid $4,000 a second in taxes, and we spent $15,000 a second in cost. We spend $1 billion a day just running our business. So this is a business where large numbers are just characteristic of it.”

    If we want to talk profiteering/gouging, let’s look at some of the other industries, like banking. I bank with LMCU. When I used Chase’s ATM to withdraw $20 the other day, LMCU hit me with a $2 fee and Chase charged me $3 for the privilege. That’s a whopping 25% for letting me have my own money! And their ATM’s have been in place for years – you would think their fees would go down as they recoup the cost of installing them but they keep going up instead. Something tells me we’re not going to see Granholm or Cox going after the banks (or the gas stations.)

    None of this is to say I want to pay any more for gas than I have too. I’m our family’s sole wage-earner – my wife is a stay at home mom – we’re definitely not rolling in cash over here. But no one has actually come up with a definition for gouging/profiteering other than “prices higher than the other day and waah, waah, I want them lower.”

  19. I would completely support a law that made it illegal for gas stations to have more profit per gallon than the State. At $4.199 the State is getting $.403 per gallon with no investment and no expenses. The law would have to be worded to have some sort of balance between replacement cost and the last delivery.

    The gouging law that the Feds tried to pass defined it as “charging an unconscionably excessive amount.” What the hell does that mean? 30 cents, 50 cents, $2 markup?

    The problem is that no one wants to pass a law with a clearly defined line that stations can’t cross that would prevent “gouging” from ever happening. Instead, they would prefer to pass a confusing law that lets them punish people for unknowingly breaking the law. Then they get to have press conferences to pretend to be a hero.

  20. That idea might actually work Retailer. I wish every station would post a breakdown of just how much money the State siphons off in taxes with each gallon sold and compare that to their own profits.

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