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California attorney general to probe possible gas-price gouging

Associated Press
SACRAMENTO, CA -- (AP) State Attorney General Bill Lockyer on Friday launched a probe into possible price gouging by gas and oil companies following Hurricane Katrina.

He said the investigation was prompted by complaints from California residents about rising gas prices after the hurricane, which destroyed oil platforms and damaged refineries along the Gulf Coast.

"Hurricane Katrina has broken families, devastated communities and destroyed lives,'' Lockyer said in a written statement. "To unjustly profit from tragedy is unconscionable.''

The investigation will examine whether oil companies or retailers violated antitrust or unfair business practice laws. It also will examine whether they broke a state law that bars retailers from raising prices more than 10 percent during government-declared emergencies.

Lockyer said he plans to subpoena records from oil refiners and examine how gas station owners set the price at the pump. He asked consumers and employees of gas stations and oil companies to contact his office if they have information about gouging or other practices that may be illegal.

His office established an e-mail address to submit those reports www.gaspricinghotline@doj.ca.gov.

Lockyer questioned whether the storm could justify higher prices in California because he said the state receives little or no refined gasoline from the Gulf region and no crude oil from there.

The industry understands consumers' frustration with the higher prices, but gouging isn't to blame, said Anita Mangels, spokeswoman for the Western States Petroleum Association.

"Petroleum products, including gasoline, are traded on the global market, so no matter where a disruption occurs, that affects prices everywhere,'' she said.

Recent higher prices have been driven by higher demand, inadequate infrastructure and a jump in crude oil prices, she said.

"The Gulf situation is just one factor in what's been going on in petroleum markets for decades,'' she said.

The Santa Monica-based Foundation for Taxpayer and Consumer Rights said the retail price of gas often is set by oil companies, which is where the group said Lockyer should focus his investigation.

"Oil companies that provide gasoline to stations set the wholesale price, and if those stations have to pay more then it's the oil company who is gouging,'' foundation president Jamie Court said.

Lockyer said he also will work with attorneys general from other states to look at gas-pricing issues related to the hurricane.

Also Friday, San Diego City Attorney Michael Aguirre called on Gov. Arnold Schwarzenegger to declare a state of emergency that would help legal authorities prosecute local gas stations or wholesale companies that gouged customers.

"You can loot by breaking the window or you can loot by raising the prices,'' he said.

Aguirre and some members of the City Council planned to introduce an ordinance next week that would make it a misdemeanor to raise gas prices "without justification.''

Earlier this week, state Sen. Joe Dunn, D-Garden Grove, introduced legislation that would give the California Public Utilities Commission authority to regulate the cost of fuel. He blamed lack of competition in the petroleum industry for high gas prices in California.

Since the end of 2003, the four largest oil companies Royal Dutch/Shell Group, BP Group PLC, Exxon Mobil Corp. and ChevronTexaco Corp. have earned a combined $97 billion, including $23 billion during the first three months of this year.
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On the Net: The attorney general's Web site: www.ag.ca.gov