MPR: State official defends sky-high gas prices

State official defends sky-high gas prices
By Laura McCallum
Minnesota Public Radio
September 26, 2001

Minnesota's commerce commissioner has told lawmakers that retailers who hiked gas prices the night of September 11 were not gouging consumers. Jim Bernstein says gas stations were merely responding to panicked customers willing to wait in line for gas at any price. Attorney General Mike Hatch called that explanation "hogwash," and says he'd support legislation to cap gas prices during a state of emergency.

"I honestly think that they were trying to do the right thing and they thought this was a way to keep people away from the pumps, said Commerce Commissioner Jim Bernstein about high gas prices in the wake of the attacks. "Were there some that were taking advantage of the situation? Certainly. But there is no limit on what you can charge for gasoline."
(MPR Photo/Laura McCallum)

As tension rose the day of the attacks on the World Trade Center and Pentagon, so did concerns about the availability of gasoline. By nightfall, rumors spread and lines grew at gas stations throughout the nation, but especially in the Midwest. In Minnesota, some stations more than doubled the price of gas and many ran out of fuel, much to the consternation of customers who had waited sometimes for hours.

A representative of the Minnesota Service Station Association says retailers who hiked prices were worried about gas shortages. Ted Brausen, who owns a station in Shoreview, says they now know they made a mistake.

"Everybody seems like they want to hang those dealers, and I understand they didn't do the right thing, because I elected not to do it. But they're still Americans, they feel bad about it," Brausen says.

Brausen says most have refunded customers' money and donated to the Red Cross. Lawmakers say while gas prices have dropped in recent days, they're still concerned about the issue, because Minnesota's prices appear to be more volatile than other parts of the country. The industry's mea culpa notwithstanding, state Commerce Commissioner Jim Bernstein told a joint legislative hearing on gas pricing that consumers, not gas station owners, were to blame for $5-a-gallon gasoline.

He says fewer than 10 percent of retailers boosted prices in response to customer demand, and those who did told him they were trying to prevent a stampede at the pump. "I honestly think that they were trying to do the right thing and they thought this was a way to keep people away from the pumps. Were there some that were taking advantage of the situation? Certainly. But there is no limit on what you can charge for gasoline, and there's maybe the difference. I don't think there should be a limit," he said.

Bernstein says if customers are willing to pay $5 a gallon, retailers should be able to charge it. "I can't imagine paying $200 for a bottle of wine. I would never pay that. Some of you may wonder why I pay $1,000 for a Mickey Mantle baseball card from 1953, but I gladly did. But that's the marketplace working, and that's how it ought to work," he said.

Attorney General Mike Hatch says gas price gouging did take place on September 11th, and says the station owners his office contacted blamed rumors from distributors or from other stations. "They never talked about that, that they were performing a public service to try to stop those 'gouging' consumers from coming in," Hatch said.
(MPR Photo/Laura McCallum)

Attorney General Mike Hatch says he's baffled by Bernstein's defense of the inflated prices. "The idea of trying to apply baseball cards, or a baseball card philosophy, to a point of crisis in America, is naivety. It is stupidity," Hatch said.

Hatch says gasoline, as a vital utility, is in a different category than luxury items. He says gas price gouging did take place on September 11th, and says the station owners his office contacted blamed rumors from distributors or from other stations. "They never talked about that, they were performing a public service to try to stop those 'gouging' consumers from coming in," Hatch said.

Hatch says 14 states have laws regulating gas prices if the governor declares a state of emergency. The Minnesota Legislature passed a law last session setting a floor for gas prices, which prevents stations from selling below cost, and some lawmakers think it's time to establish a ceiling.

Commissioner Bernstein says Gov. Ventura would oppose any price caps, which Bernstein argued would dry up supply.

House Commerce Committee Chairman Greg Davids, R-Preston, says he's considering introducing legislation that would only cap prices during a time of crisis. "I don't think it'd be wise to put a price cap on at this point, I don't think it would be wise at all, I agree with Commissioner Bernstein certainly on that, but I think the attorney general may need some more latitude when you're looking at gouging, because really he doesn't have a whole lot he can do when it comes to price gouging," Davids said.

Hatch says he plans to continue gathering information on the September 11th price spikes, and says they may violate antitrust laws. end of table for audio etc

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