Ky. attorney general accuses Marathon of price gouging

FRANKFORT, KY (FOX19) - Kentucky Attorney General Jack Conway has filed a motion for a temporary injunction alleging that Marathon Petroleum Company LLC illegally raised the wholesale price of gasoline and other motor fuels in markets across Kentucky during a time of emergency.

The motion alleges that Marathon violated Kentucky's price-gouging statute (KRS 367.372, et seq.) that was triggered when Gov. Steve Beshear declared a state of emergency on April 26 in the wake of massive flooding.

"I want to thank Kentuckians who called or emailed our office to report the drastic changes in gas prices that reached more than $4 a gallon at the pump in many communities," General Conway said. "Gas prices jumped about 30 cents overnight. The tips provided by consumers and retailers helped us bring this action that will hopefully provide some relief for Kentuckians who are struggling to put gas in the car and clean up from flooding."

The motion, filed Friday in the ongoing case against Marathon and its wholly owned subsidiary, Speedway LLC, for alleged price-gouging violations following Hurricanes Katrina and Rita in 2005, asks the court to require Marathon to lower its wholesale prices in all Kentucky markets to no more than the price charged on April 25.

The motion alleges that Marathon's wholesale price for regular 87 octane gasoline at its Louisville terminals on April 25 was $3.25 per gallon and that it raised its wholesale price to $3.48 on April 29 and up to $3.46 on May 9. Thursday's rack price was $3.32.

Wholesale prices for reformulated gasoline were raised from $3.45 to $3.65 and $3.61 on those dates. The wholesale prices vary depending on the location in Kentucky and the amount of fuel purchased, but similar reductions would be expected in all Kentucky wholesale markets.

Attorney General Conway is alleging that Marathon's actions violate the price-gouging law, since the law only permits suppliers to increase prices if there has been an increase in costs to the supplier.

The Office of the Attorney General does not believe that cost increases in this case justify the price increases. The memorandum supporting the motion alleges that Marathon's increase of price was unsupported by any increase of costs, but instead was linked to an increase in the commodity spot market price and New York Mercantile Exchange future prices.

Marathon has previously admitted in the case that spot market prices have been a primary factor in its pricing decisions.

A hearing on the motion is set for Monday at 9 a.m. in Franklin Circuit Court.

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