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Carl Kanowsky: Gas prices gouging state

Posted: October 12, 2012 2:00 a.m.
Updated: October 12, 2012 2:00 a.m.

In the past year or so of writing this column, the editorial staff at The Mighty Signal have on occasion slashed some of the product of my pen (actually, it’s a computer). Their rationale was sometimes I went into territory “unfit for a family paper.”

Well, I’m here to tell you that our local rag has not just veered beyond material fit for general consummation. They’ve actually made some of these stories front page, headline news.

The stories? How the California consumer is being raped by the oil companies, their distributors and the gas stations themselves.

As we all know, pump prices have skyrocketed, going up by more than 10 percent in one week. Some prices have increased by 25-cents just in the span of time from morning to evening.

Now, during this past week, have any of you noticed a dramatic jump in the number of oil tankers delivering gas to the Santa Clarita stations? No, of course not. If not, then how do the gas station owners explain that all the stations went up uniformly by fifty-cents at the same time? It might be comprehensible if it was just all of the Exxon stations or all of the Shell ones.

But that’s not what happened. Rather all stations in town went from being around $4.00 for a gallon of regular to being between $4.60 to $4.80 or higher, virtually overnight.

How does this happen? Certainly it’s not just a coincidence that suddenly all gas prices have risen to the highest levels ever. Rather, it looks a lot more like all of the gas station owners jointly have agreed to these new, artificial prices. Kinda like a conspiracy, don’t you think?

And saying that the wholesale prices were escalating just doesn’t fly. The stations had gas in the ground that they had bought days or weeks earlier at much lower prices. The owners did not use up all of their inventory and then increase prices to reflect how the distributors were gouging them. In a matter of just a few days, the same gas that was selling (presumably for a profit) at $4 was now going for 50 cents higher or more.

Here’s another way of seeing how perverse this predicament is. Assume you’re going to buy two loaves of bread at Vons for $2.25 each. Just as you reach the checker to buy your groceries, the store manager comes to alert you that you now owe Vons an additional 50 cents because he’s been told that the price of wheat was in short supply and would be increasing soon. So, of course all bread in the store had to go up.

Take it a step further. At the same time, the managers at Ralph’s, Albertson’s, Costco, Vallarta and Trader Joe’s raise their bread prices by an identical 50 cents at the same time. It would look a little suspicious. In fact, have you ever seen this happen before?

As any anti-trust lawyer would tell you, this smells a lot like price fixing. Under the Sherman Anti-Trust Act, the elements of price fixing are (1) whether there was a conspiracy to fix prices in violation of the antitrust laws, (2) the fact of plaintiffs’ antitrust injury, or impact of defendants’ unlawful activity, and (3) the amount of damages sustained as a result of the antitrust violations.

Certainly at least two elements of price fixing exist; the injury we’ve all suffered in paying the higher prices, and the amount of damages is simply the higher amount we’re paying as a result of the oil industry’s actions.

Now, all we need is a good Congressional investigation into how the gas prices mysteriously zoomed heavenward in the same amount at the same time. I’m sure that will happen as soon as the oil industry decides to treat the American public fairly.

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by e-mail at or online through his law firm at Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.


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