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Post date: October 31 2013

A.G. Schneiderman Wins Sandy Gas Gouging Case Against Long Island Station

Suffolk County Judge Orders USA Petroleum To Pay $12,000 In Penalties And Costs

Schneiderman: We Will Continue To Go After Gougers; New York Consumers Deserve Better During Emergencies

NEW YORK - As part of an ongoing probe of high gasoline prices in the wake of Hurricane Sandy, Attorney General Eric T. Schneiderman today announced a ruling issued by Suffolk County Judge Jerry Garguilo that holds AGIP Gas, LLC., responsible for having gouged consumers by illegally increasing its pump prices in the wake of the storm. The judge ordered the company, operating as USA Petroleum at 11 East Main Street in East Islip, to pay a penalty of $10,000 and $2,000 in costs. 

Following Hurricane Sandy, many Long Island gas stations were closed due to power outages and other damage from the historic storm. During that time, USA Petroleum charged consumers unconscionably excessive retail prices for gasoline in violation of New York State’s price gouging law – and consumers desperate for gasoline for their vehicles and home power generators lined up to pay the exorbitant prices.

“USA Petroleum took advantage of the devastation caused by Sandy to overcharge New York consumers and their own neighbors, people who were reeling from the effects of this terrible storm,” Attorney General Schneiderman said. “Judge Garguilo’s decision holds the owners of this station accountable for their illegal price gouging and will serve as a warning to those who would violate this law.”

New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during natural disasters. The price gouging law covers New York State vendors, retailers, and suppliers. The law specifically says that a price may be considered excessive if there is a “gross disparity” between the prices charged immediately before and after the emergency and the disparity is not attributable to higher costs imposed upon the seller.

In ruling on the Attorney General’s lawsuit issued last week, Judge Garguilo found a “gross disparity” in USA Petroleum’s retail prices for gasoline before and after the storm hit New York’s coastline. While the gas station did show a modest increase in the costs it paid for fuel, those cost increases were dwarfed by the station’s increases in the retail prices it charged consumers. Prior to the storm, the difference between USA Petroleum’s pre-tax fuel costs and it retail price was $1.07 per gallon for regular unleaded gas. Following Hurricane Sandy (on November 3 through November 5, 2012), the difference between USA Petroleum’s pre-tax fuel costs and its retail price for the same grade of gasoline had jumped to $1.45 per gallon; an increase of 35 percent.

The judge, who found that prices charged by USA Petroleum were “unconscionably excessive” as a matter of law, assessed penalties and costs of $12,000 against the gas station.  

Prior to Sandy, Attorney General Schneiderman warned vendors in areas forecast to be affected by Sandy against price gouging. Nonetheless, in the wake of the storm, the office received hundreds of price gouging complaints. As a result of his ongoing investigation into high gas prices during the storm emergency, the office has so far secured $301,118 in penalties and costs, including from this judicial ruling, and from 44 gas stations in New York City, Long Island and the Hudson Valley that gouged their customers. That total includes the largest penalty for a single station, $23,733 against Mena Inter Inc., doing business as a USA Petroleum gas station in Farmingdale, Long Island.

This matter was handled by Assistant Attorney General Matthew Eubank in the Attorney General’s Brooklyn Regional Office, under the supervision of Assistant Attorney General-in-Charge of the Brooklyn Regional Office Lois Booker-Williams and Executive Deputy Attorney General Marty Mack.