By Trent Moore
HOLLY POND — Jet Pep General Manager Chuck Moore said reports of price gouging at Jet Pep stations are unfounded, noting the reason for potentially higher prices is a more complicated issue than it may initially seem.
“When you try to explain it to a customer over the phone, sometimes it’s hard for them to take in,” he said.
Moore explained that independent companies such as Jet Pep purchase fuel on what is called the “spot market,” which means they purchase surplus fuel from refineries.
“It’s the excess of refineries not sold at their own (stations) ... normally at a lower price,” he said. This is why Jet Pep fuel is normally less expensive than major stations, such as Texaco or Chevron.
With the threat of a possible gas shortage caused by Hurricane Ike, and some refineries in Texas being closed to weather the storm, Moore said the excess gas his company normally purchased at a discounted price was no longer available.
“In a time of panic, there is no excess,” he said.
When the prices suddenly rose due to the fear of a shortage, and with no excess fuel available, Moore said Jet Pep was forced to pay much higher prices to ensure the stations remained stocked with gasoline.
“When that is the only way to get the product, it’s the only way to get it,” he said.
A handful of price gouging complaints were made against Jet Pep locations in the Cullman area, due to prices as high as $4.65 for a gallon of regular gasoline during the past week.
With a state of emergency currently declared in Alabama, price gouging laws went into effect Sept. 12. This is to prevent companies from charging “unconscionable” prices for fuel. What exactly is deemed unconscionable is at the discretion of the State of Alabama Attorney General’s Office.
Moore said the decision to raise prices so drastically at stations in the area was a hard one.
“We just looked at our volume versus the increase,” he said. “We had to pass some of that on to the streets.”
Moore also noted the Motor Fuel Marketing Act, found in Alabama law. The act states, “It is hereby declared to be the legislative intent to encourage fair and honest competition, and to safeguard the public against creation of monopolies or unfair methods of competition ... It is further declared that the advertising, offering for sale, or sale of motor fuel below cost or at a cost lower than charged other persons on the same marketing level with the intent of injuring competitors or destroying or substantially lessening competition is an unfair and deceptive trade practice.”
This essentially means, by law, fuel cannot be sold for a lower price than the wholesale amount the station paid. So, when companies like Jet Pep pay drastically more for gas, the price must also be high enough to adhere to the Motor Fuel Marketing Act.
“Competition keeps fairness,” Moore said.
Charging so much for fuel has definitely created a significant dent in sales at Jet Pep stores, Moore said.
“We’re not doing very much business,” he said. “Not until we can get competitive again.”
Moore also said there was a reason the price signs at Jet Pep stations in Cullman — which remained empty and did not list the higher prices — were left blank.
“We consider the price sign as advertising,” he said. “We weren’t really in advertising mode.”
With Hurricane Ike now passed, Moore said there is hope fuel prices will start returning to normal again soon.
“We’re getting signals that it will decrease again,” he said. “We will pass that reduced cost straight to the streets.”
By Trent Moore
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