The Morning Report
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Saturday, September 03, 2005 | Local and state officials fired a shot over the bow of would-be gasoline profiteers Friday, calling on Gov. Arnold Schwarzenegger to declare a state of emergency in California due to high prices and promising legal action against companies that artificially raise gas prices in the wake of Hurricane Katrina.
“If gouging takes place, we will use our full authority to put people in jail if we have to,” said City Attorney Mike Aguirre. “We’re going to fight them in the ways we’re best equipped to fight.”
Aguirre and Councilwoman Donna Frye are pursuing the passage of an emergency declaration in San Diego that would allow the City Attorney to prosecute companies engaged in price gouging.
If convicted, price gougers could face misdemeanor penalties of up to six years in jail or a $1000 fine each day unfair prices were charged.
“This ordinance shall also apply to declarations of a local or national emergency outside the jurisdiction of the City of San Diego which causes excessive and unjustified increases in the prices of goods and services vital and necessary for the health, safety and welfare of consumers,” reads the proposed legislation.
The “emergency” ordinance would face fewer restrictions to pass than standard legislation, and will be on the docket at Tuesday’s City Council meeting.
Mike Shames, executive director of the Utility Consumers’ Action Network, a consumer watchdog group, said although he couldn’t prove oil companies were engaged in price gouging, “it is a strong indication of gouging in light of the fact that Katrina has not affected any of the fuel supplies on which California relies.”
Gasoline prices have jumped 5 to 10 cents per day since Hurricane Katrina shut down oil refineries on the Gulf Coast earlier this week. In San Diego on Friday, the average price for a gallon of regular unleaded was slightly more than $3.
“From a consumer standpoint, it is a state of emergency,” said Frye. “It’s a consumer nightmare.”
Ron Planting, spokesman for the American Petroleum Institute, a Washington, D.C.-based industry group, said California gas was getting more expensive – even though its refineries are operating at normal capacity – because of our connection to other national markets.
The lack of gas coming in through the Gulf Coast forces eastern and midwestern areas to buy their gas from other places like California, he said.
Shames disagreed, saying, “I’ve seen no confirmation of the diversion of California fuel.”
Legislators at the state level are also gearing up to fight what they say are unfairly high gas prices.
State Sen. Christine Kehoe, D-San Diego, is cosponsoring legislation to be introduced next week that would institute price caps on gasoline and impose a tax on windfall profits. She supports asking the governor to declare a state of emergency.
She said despite their claims of high demand and short supply, oil companies are earning record profits.
“The market is so tight that prices always go to the highest level. The business is narrowly focused in the hands of six or seven companies that own all the refineries in California.”
Jeffrey Spring, a spokesman for the Southern California Automobile Association, disagrees with the idea that high gas prices warrant a state of emergency in California.
“This is not what most people would look at as a state of emergency. They need to put [high prices] into context,” he said.
Spring said that the Automobile Association supported investigations into price gouging in the past, but argued that recent jumps had “underlying explanations.”
“People don’t want to hear it, but there’s a stronger demand for gas now,” he said.
Kehoe acknowledged greater demand, but said it still didn’t warrant the daily leaps in prices.
“Most consumers at the pump, we think we’re being gouged,” she said.
“I’m going to take the trolley now,” said a man who identified himself as Jesus R. “This is my last day of driving.”
Another driver who asked not to be identified said he was sure the high prices were feeding oil companies’ profits.
“You’re telling me the government can’t step in and regulate?” he said.
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