Home Local News ‘Price gouging’ law leads to misinformation, uninformed reporting

‘Price gouging’ law leads to misinformation, uninformed reporting

Maya Reagan - Carolina Journal

RALEIGH — N.C. Attorney General Josh Stein is getting a slew of complaints from consumers over ever-rising gas prices. 

Residents say owners of gas stations are unnecessarily inflating prices to take advantage of supply disruptions because of the war in Ukraine. They accuse the owners of “price gouging,” which is illegal in North Carolina during a state of emergency. The price-gouging law kicks in when the governor issues such an emergency, although the current price issue is misleading because North Carolina has been under a state of emergency for two years because of the pandemic.

COVID has waned considerably, so much so that the Centers for Disease Control and Prevention have lifted most restrictions, and towns and counties have eliminated things such as mask mandates and social-distancing rules.

Yet Gov. Roy Cooper’s emergency continues, even as Republican lawmakers rail against it.

Under the gouging law, Stein writes on the AG’s website, his office “can put a stop to price gouging and seek refunds for consumers who paid too much. The courts may also impose civil penalties against price gougers of up to $5,000 for each violation. The law applies to all levels of the supply chain from the manufacturer to the distributor to the retailer.”

Stein’s website includes a form people can use to report alleged instances of gouging. The average price for a gallon of regular gas on Wednesday was $4.13, according to AAA. The national average was $4.25.

“North Carolina’s price gouging law is currently in effect through April 5 due to COVID concerns, and our office has received 83 complaints related to gas/fuel price gouging,” Nazneen Ahmed of Stein’s office told Carolina Journal. “We are currently reviewing those complaints, though the majority of those gas price complaints appear to be a result of the global gas price increases. … ”

In a statement, Stein says, “Rapid economic growth, supply chain disruptions, and the Russian invasion of Ukraine are having a real impact on gas prices. Gas stations may need to increase the price of gas because their costs have jumped, but they can’t take advantage of this situation to charge egregious prices and exploit North Carolinians. If you see a gas price that seems too high, please report it to my office at 1-877-5-NO-SCAM or ncdoj.gov/pricegouging so we can investigate.”

Gasoline prices in the U.S. had already been creeping up in recent weeks, even before Russian forces invaded Ukraine, the Wall Street Journal reported Wednesday. Still, local news outlets continue churning out reports of rising gas prices and alleged gouging, shallow reports lacking proper context.

Writes the Journal, “More drivers had been returning to the roads as COVID-19 restrictions eased, but the nation’s capacity to refine gasoline remained below pre-pandemic levels, creating a choke on supply when demand was on the rise. Russia’s invasion of Ukraine caused another supply shock as traders, shippers, and financiers rejected Russian oil, omitting much of it from the daily global supply. Oil prices rose again Tuesday after the Biden administration announced a ban on imports of Russian crude oil, certain petroleum products, liquefied natural gas, and coal.”

But economists and market experts with the John Locke Foundation say higher prices are necessary to keep the supply flowing.

“When high demand outstrips the immediately available supply of a product, its price rises,” John Hood, columnist and president of the John William Pope Foundation, wrote in 2020.

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“That’s a piece of information, not a gouge. It signals to producers how much more to make, and it signals to suppliers where the product may be most needed. If government suppresses the price by threatening legal action, the shortage will last longer.”

Jon Sanders, Locke research editor and senior fellow in regulatory studies, goes further.

Higher prices, he wrote in 2018, are “exactly what we need to ensure we don’t run out of necessities like water and gas. They are like flashing red lights to bottled water suppliers, bread makers, and gasoline distributors in other states, telling them Yes! You CAN redirect your stuff to North Carolina because you can still take care of your families when you do!”

Why are gasoline prices rising so fast now? 

“Because,” Sanders told Carolina Journal on Wednesday, “we have a worldwide supply shock for oil exacerbated by the uncertainties of war and whatever reactionary policies governments might pursue.”

Why are some people reporting their local gas station for “gouging”?

“Because the anti-gouging law is activated whenever the governor declares a state of emergency, and this governor has placed us under a perpetual, two-years-running state of emergency supposedly for COVID-19, but that even he says is to ‘draw down federal funds.’”

Local gas stations are held hostage to spiking prices as are their customers, Sanders says. Further, he says, they shouldn’t be harassed as an unintended byproduct of the governor enforcing a COVID emergency order in place well beyond the majority of U.S. states. 

“This ‘emergency,’” Sanders says, “has nothing to do with any kind of natural disaster response for constricting supply specifically to parts of North Carolina leading to price increases, which is the kind of emergency the anti-gouging law is intended to address. Economically speaking, it’s a bad law even under those circumstances, but here it’s just plain ridiculous.”

Since 2018, the AG’s website says, Stein has brought 11 lawsuits against 27 defendants under North Carolina’s price gouging statute. He has obtained 14 judgments or settlements totaling $1,080,000 against 25 defendants, including a $274,000 settlement that was the largest price gouging settlement in the department’s history.

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