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Gas Prices on the Rise Again?
The Michigan Department of Attorney General is responsible for safeguarding consumers against price fixing and price gouging. They are prepared to take action if necessary. In May, for instance, the department ordered a BP gas station in Plymouth to halt unlawful business practices.
Currently, consumers in Michigan are curious about the relentless increase in gas prices. This article aims to address common inquiries and shed light on the role played by the Michigan Department of Attorney General in investigating gas-pricing issues.
Who Benefits from Dramatically Increased Gas Prices?
People often wonder who benefits when the price of gasoline skyrockets. The Attorney General’s Office reviews the retail profit margins and the actual cost of providing gasoline products across the state. Historically, it seems that gas station owners (referred to as gas retailers) do not profit from high prices. Instead, refiners and producers higher up the supply chain extract the substantial profits.
The Fluctuating Nature of Gas Prices
A frequently asked question is: why do gas prices keep fluctuating? The cost of gasoline is influenced by various factors such as crude oil prices, refinery processing, transportation, distribution, marketing, operating expenses, retail station operations, and taxes. The prices at the pump reflect these costs, as well as the profits or losses incurred by refiners, marketers, distributors, and retail station owners.
Several historical factors have also affected gas prices, including increasing demand, a decline in U.S. refinery capacity, a decrease in gasoline inventory, and regulatory factors. To monitor and prevent unwarranted high prices, federal agencies and Congress closely monitor the issue. The Energy Independence and Security Act, for example, empowered the Federal Trade Commission to police market manipulation in the petroleum industry. However, it is important to note that the price of gasoline is influenced by a multitude of factors, making it a complex issue.
Promoting Price Competition and Protecting Consumers
The Attorney General’s Office in Michigan is concerned about the impact of high gas prices on consumers, the state’s tourism industry, and the overall economy. To protect consumers, the Attorney General believes that fostering healthy and fierce competition among different petroleum refiners, marketers, and retailers is crucial.
Various antitrust laws allow the Attorney General to take action in order to protect competition in the marketplace. In some cases, retailers may be investigated for “price gouging,” which occurs when they charge excessively high prices compared to similar property or services. However, price fluctuations of 30 to 40 cents per gallon have been common due to international events, natural disasters, accidents at refineries, and other causes. Such price movement, in itself, does not establish grossly excessive pricing under the statute.
Price Fixing or Retailers Responding?
In a certain geographic area, if all gas stations raise their prices by the same amount on the same day, it might lead to suspicions of price fixing. However, gas station retailers are free to independently determine their prices. It is a common practice for retailers in the same area to match prices, which creates the impression of simultaneous price increases or decreases. In the absence of explicit agreements to raise or lower prices, matching price changes is not illegal.
Reporting Price Fixing or Gas Gouging
If you suspect price fixing or gas gouging and possess direct evidence of a conspiracy between companies or verifiable evidence of a retailer charging grossly excessive prices, please contact the Attorney General’s Consumer Protection Division. They are dedicated to fighting against unjustifiably high gasoline prices.
Consumer Protection Division
- P.O. Box 30213
- Lansing, MI 48909
- Phone: 517-335-7599
- Toll-free: 877-765-8388
- Fax: 517-241-3771
- Online complaint form
For more information, please visit 5 WS.