$20 for a Gallon of Gas? Texas Attorney General Warns Price Gougers of Huge Fines

Colin Fredericson
By Colin Fredericson
August 30, 2017USshare
$20 for a Gallon of Gas? Texas Attorney General Warns Price Gougers of Huge Fines
People walk down a flooded street as they evacuate their homes after the area was inundated with flooding from Hurricane Harvey in Houston, Texas on Aug. 28, 2017. (Joe Raedle/Getty Images)

A Texas gas station has been found charging $20 for a gallon of gas in the wake of flooding caused by Hurricane-turned-tropical storm Harvey. The gas price gouger was discovered on Aug. 28, and reported to the Texas state attorney general.

The office of State Attorney General Ken Paxton has already received 600 price gouging complaints, according to a spokesperson. The convenience store where the gas was being sold could face steep fines.

“That convenience store was reported to us in a complaint—we’re tracking all complaints as they come in and following up with persons/businesses involved in price gouging and scams as quickly as we can, and in person if possible,” spokesperson Kayleigh Lovvorn told Jalopnik.

Once a disaster has been declared, the attorney general’s office has the authority to prosecute price gougers.

“These are things you can’t do in Texas,” Paxton told CNBC in an interview. “There are significant penalties if you price gouge in a crisis like this.”

Normal fines range from $20,000 to $250,000 per occurrence if the victim is over 65 years of age.

The attorney general’s office urges people to first try to work things out with the business directly if prices seem unfairly high. If that doesn’t work, one can file a direct complaint.

The attorney general also mentioned other forms of price gouging that his office has received complaints about. He mentioned water being sold at $99 a case, hotel rooms tripling and quadrupling in price, and the gas issue. He says that Texans may not realize the restrictions currently in place on upping prices.

Economists have disagreed with penalizing the rise in prices of products during disasters, saying it’s a necessary market effect of supply and demand.

Economics professor for the American Enterprise Institute says that if prices are kept artificially low by government intervention, consumer demand for scarce supplies will quickly outstrip available resources and create artificial shortages.

“While price ceilings may be motivated by an understandable desire to help consumers in Texas and Louisiana by keeping prices low, those artificially low prices exert secondary effects that are guaranteed to retard the recovery process,” he said.

Paxton was pressed by CNBC interviewers about whether enforcing price gouging laws would increase the likelihood of shortages, since higher prices would then fall on the businesses themselves who would face a shortage of supplies from distributors. Paxton doesn’t see that as an issue.

“I don’t think that as large as our country is, as large as Texas is, that supply ultimately is going to be that big of an issue. And my job is to enforce the law that the Texas legislature put in place and we’re going to do that,” said Paxton.

The flooding in Texas is expected to get worse because federal engineers have to release water from overflowing reservoirs in order to take the pressure off dams.

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