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Subpoenas possible in price-gouging probe
Attorney general hasn't found any wrongdoing yet

Posted Monday, September 12, 2005 - 6:00 am


By David Dykes
BUSINESS WRITER
ddykes@greenvillenews.com

Attorney General Henry McMaster has received 175 complaints from the public of perceived price gouging or illegal gas-pricing activity in the aftermath of Hurricane Katrina, and he is considering subpoenas of petroleum-related interests to get answers to the dramatic increase in prices, a spokesman said.

In addition, McMaster is reviewing 650 complaints the Department of Energy got on its gas-price hot line and forwarded to his office, said Trey Walker, his spokesman.

"He has not found any instances of price gouging in South Carolina so far," Walker said. "But we are still reviewing the 175 complaints that this office has received and are now beginning to review the 650 complaints that the Department of Energy has provided us."

McMaster has joined a multistate investigation into the rise in gas prices.

Motorists clearly were frustrated, based on the DOE complaints forwarded to McMaster.

"This is absurd. Something has got to be done," exclaimed a motorist who stopped for fuel on Butler Road in Mauldin and found gas for $4.89 a gallon.

"God help those who work for a living and have to travel back and forth to their jobs," said a driver in Aiken, where gas was $3.29 a gallon.

Attorneys general in 43 states want to find out whether the recent increase is due solely to market forces, or whether illegal activity is exacerbating the problem, McMaster said.

While state law allows prosecutors to deal with complaints of price gouging only during a state of emergency declared by the governor, McMaster has other options, Walker said.

"There are two avenues available for the attorney general to pursue if the evidence warrants -- that is unfair trade practice and anti-trust," he said.

In recent days, McMaster has stepped up his efforts, asking the South Carolina Petroleum Council and other industry officials to set up meetings with major oil companies "where we will ask them questions concerning the (gas) shortage, the price hikes and when consumers can expect for the price of gas to subside and if, in fact, they will ever return to pre-Katrina levels," Walker said.

As the probe continues, McMaster, "along with attorneys general from other states within this working group that is going on, is considering issuing subpoenas here in South Carolina," Walker said.

Walker declined to be more specific, except to say subpoenas could involve "petroleum-related entities."

No meeting dates have been set, but "we're trying to get them done as soon as possible," he said.

Kay Clamp, executive director of the state Petroleum Council, couldn't be reached for comment.

Michigan Attorney General Mike Cox said the investigation by a team of lawyers from all participating states will include pricing at points of entry for crude oil and costs associated with the refining process. In addition, individual states will continue gathering and analyzing information regarding prices, Cox said.

"All of these efforts will ensure that if criminal activity took place at any point along the supply chain, we will find it," he said.

The Energy Information Administration said last week its survey of retail gasoline prices showed the U.S. average for regular gasoline rose 46 cents from the previous week to $3.07 per gallon on Labor Day.

That was just a nickel shy of the inflation-adjusted record of $3.12 in March 1981, and by far the highest price ever if not adjusted for inflation, said officials at the EIA, a statistical agency of the U.S. Department of Energy.

Some motorists found themselves doing something they had not done since the late 1970s: waiting in long lines to fill up their cars, EIA officials said. Several gasoline stations ran out of fuel, they said.

Friday, McMaster talked with John Felmy, chief economist for the American Petroleum Institute, to get an overview of issues surrounding the importation and distribution of oil and how it is traded in the futures and commodities markets, Walker said.

If Hurricane Ophelia or another major storm were to slam South Carolina, gas supplies and prices could again become an issue, Felmy said.

"It's going to be a function of how much does it do to the infrastructure," he said. "At the same time, you're likely to see some demand surges as you have evacuations and so on. There's a whole range of effects."