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Perdue: Georgia won’t tolerate price gouging

Gulf hurricane shuts down refineries, but price hike likely will be temporary

POSTED: September 17, 2008 5:01 a.m.
SCOTT ROGERS/The Times

Harry Smith of Marietta fills gasoline containers Friday afternoon at the Texaco station on Dawsonville Highway.

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Soaring fuel prices on Friday led Gov. Sonny Perdue to sign an executive order declaring a state of emergency in Georgia and activating the state’s price-gouging statute.

Fuel prices were going up across the state as the oil refineries in the Houston and Galveston areas shut down in preparation for the storm. Perdue responded Friday evening to the quickly rising prices with the executive order.

"The threat of Hurricane Ike has disrupted the production and distribution of gasoline, which will have an effect on prices," Perdue said. "However, we expect the prices that Georgians pay at the pump to be in line with the prices retailers are paying. We will not tolerate retailers taking advantage of Georgians during a time of emergency."

Suspected incidences of price gouging can be reported to the Governor’s Office of Consumer Affairs at 404-651-8600 or 800-869-1123.

Georgia’s price-gouging statute prevents retailers from selling goods or services at an unreasonable price. The statute does not prevent price increases that accurately reflect an increase in the cost of the goods or services to the retailer, an increase in the cost of transporting the goods or services into the area, or an increase due to the market forces of supply and demand.

But AAA Auto Club South Spokesman Gregg Laskoski predicts the price hikes only will be temporary.

"What happens as a result of Ike is not likely to be a very long-term problem," Laskoski said. "Wholesale prices have gone up about a dollar a gallon just in the last 24 hours. And the wholesale prices have gone up because of the expectation that Ike could either do damage, or just the delays."

The reason for the sudden hikes, Laskoski said, is that many of the refineries already have shut down as a precaution.

"So many refineries have had to shut down. It’s not like they could just flip a switch. It takes a while for them to completely shut down, and it also takes several days for them to completely get back up to being fully operational. We’re looking at about a six- or seven-day period where the supply side is significantly tight," Laskoski said.

What is especially unusual about the higher prices is that they coincide with a drop in the price of crude oil.

"This is one of the rare occasions when there’s a real disconnect between the price of crude and what’s happening in the wholesale and retail level," Laskoski said.

The Associated Press reported that the price of crude oil briefly dropped to below $100 a barrel for the first time in five months Friday. Laskoski said crude oil peaked at $147 a barrel in July.

Ike already had begun lashing the Texas coast Friday evening and was forecast to land early this morning near Galveston, an island about 50 miles southeast of Houston. The Houston region is home to about one-fifth of U.S. refining capacity, and the site of a major fuel and grain distribution channel.

Local officials also were taking action with the possibility of a fuel shortage looming. Gainesville government officials met Thursday with representatives from Mansfield Oil Co. and are taking measures to conserve the fuel that will be needed for public services over the next few weeks, City Manager Bryan Shuler said.

"We’re going to have to make adjustments and try to protect our supply and watch our spending," Shuler said. Effective Monday, Gainesville officials have suspended all take-home vehicle privileges for city employees. The edict covers all city departments, including police, Shuler said.

Shuler gave city employees until Monday to stop using their take-home vehicles so that they would have time to make other transportation arrangements, he said.

Taking further conservation measures, the city will put off some activities that do not have an impact on daily operations, like fire hydrant inspections, to make sure "the gas that is available to us is used first for essential services," Shuler said.

On Friday, Shuler said the city has enough fuel to last about two weeks, and these strict conservation measures will last until the city is clear of any possible gas crisis.

"It all depends on how long all of this lasts," Shuler said. "Nobody knows for sure how long we’re going to be facing this ... this is not necessarily a permanent thing."

The Hall County government is waiting out the storm to take action, Public Information Officer Nikki Young said. If Hurricane Ike does any significant damage with lasting effects, then county officials will decide what action to take, she said.

The county has a contract with Pacific Pride commercial fueling that gives its public safety vehicles priority on fuel purchases if there happens to be a shortage, Young said.

"Until we know what actually happens we’re not going to take any action right now," Young said. "However, we are taking close attention to what’s going on."

If gasoline is in short supply next week, the Gainesville school system may resort to cut bus services for children who participate in after-school activities during the week.

Merrianne Dyer, superintendent of Gainesville schools, said the school board may take a close look Monday at cutting transportation for students participating in after-school activities. Dyer said the city school system’s 40 buses already have filled up on diesel fuel to ensure the system will be able to provide regular route transportation to and from school next week.

Jewel Armour, executive director of transportation for the Hall County school system, said the system has enough diesel fuel to last three or four weeks. He said the system has its own fuel tanks at multiple locations, including at North Hall and Chestatee high schools and at the school system’s bus shop.

Armour said he has spoken with D-Jay Petroleum, the school system’s local fuel provider, and feels comfortable the school system is in good shape with its supply.

"We’ve fueled up, but we’ve been told we’ll get fuel if we need it," Armour said. "I think we’re fine."

While all are getting ready for the worst, they are hoping it doesn’t happen.

"Mary and I hope and pray the damage caused by Hurricane Ike will be minimal," Perdue said. "Georgians stand ready to assist our fellow Americans in any way possible as they recover from the impacts of this dangerous storm."

The Associated Press and Times staff writers Jessica Jordan and Ashley Fielding contributed to this report.

Soaring fuel prices on Friday led Gov. Sonny Perdue to sign an executive order declaring a state of emergency in Georgia and activating the state’s price-gouging statute.



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