'Gouging' not to blame for gasoline, insurance hikes

The Oklahoman Editorial Published: June 4, 2013

GASOLINE price spikes in Oklahoma and some other states indicate that illegal price gouging is going on. Profits reported by property and casualty insurance firms indicate that premium hikes are unwarranted.

Those are the populist outcries. Now for the reality:

Travelers leaving Texas and entering Oklahoma have noticed a dramatic difference in gas prices recently. Although the differential has started to decline, Oklahoma drivers have been floored by the cost of filling the tank. Price gouging?

No. Gas retailers price the commodity based on what they're paying refiners for the product. As The Oklahoman's Adam Wilmoth explains, the nation is divided into federal Petroleum Administration for Defense Districts (PADDS) and Oklahoma is in a different PADD than Texas. Refinery downtime in the district that includes Oklahoma accounts for price hikes that aren't being seen in Texas. It could be worse: Oklahoma's average price for regular unleaded was $3.735 in a recent snapshot of gas prices. In North Dakota it was $4.085.

Raising prices too much under some circumstances can be illegal. “Gouging” is often drawn as a weapon to criticize what could be ordinary business pricing practices. New York has settled gouging complaints with as many as 30 gasoline retailers based on alleged gouging following Hurricane Sandy last year. Oklahoma Attorney General Scott Pruitt reminds us that dramatic price increases are illegal following designations of federal disaster areas. A state law passed after the May 3, 1999, tornado outbreak led to the protection.

Protection against increases in property and casualty insurance premiums is another matter. Since Oklahoma leads the nation in federal disaster declarations in recent years, it's no surprise that premiums are high and will get higher. Price gouging?

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