Jackson gas station owner denies price gouging during Hurricane Ike

The Missouri attorney general's office is investigating Jackson Bait and Tackle for price gouging in the wake of Hurricane Ike, but its manager claims an increase in prices was necessary to safeguard the business from running out of gasoline.

The attorney general's office has filed a lawsuit against the station that would impose a fine of $8,000 and additional penalties if price gouging were proven.

In a letter dated March 11, attorney general senior counsel Stewart Freilich said that between Aug. 15 and Sept. 10, the price of unleaded gasoline at the station was $3.56 and increased to $4.09 on Sept. 11 and remained at $3.99 from Sept. 13 to 17. The letter stated the station's profit margin increased from an average of 13 cents a gallon between Aug. 15 and Sept. 10 to 64 cents per gallon on Sept. 11 to 12 and 54 cents a gallon from Sept. 13 to 17.

Peter Fahey with Remo 1 LLC, the New York-based company that owns Jackson Bait and Tackle, sent a copy of a March 25 letter addressed to Freilich to the Southeast Missourian. In it, he said "your interpretation of the information we sent you is wrong and to request money in return for dropping the issue smacks of blackmail and extortion."

Fahey told the Southeast Missourian via phone that he preferred not to comment further on the matter.

In his letter to Freilich, Fahey said the station "raised the price to meet the market and keep our gas for future sales so that we would not run out.

"That's what was going on. No grand scheme to get rich from Hurricane Ike."

Fahey's letter also said his profit margin was 17 cents per gallon on Sept. 11, which he said was not price gouging, countering it was instead gross margin on unleaded fuel. Gross margin is the percentage of total sales revenue the company retains after incurring direct costs associated with making the goods and services sold by the station. Fahey said he had to use that money to fund his payroll, electric, heat and service costs.

"Does a 4.53 percent gross margin before paying any operating expenses sound like gouging to you?" Fahey said in the letter. "It doesn't to me and it won't to any other business person in Missouri."

Fahey continued to write that the price of a gallon of unleaded gasoline was $3.60 from Sept. 5 to 11, when the price was raised to $3.69 at 3:09 p.m. and to $4.09 by 6:41 p.m. The station closed at 9 p.m. that day. The following day the price was lowered to $3.75, Fahey wrote. The average price of gasoline nationwide on Sept. 11 was $3.671 per gallon of unleaded gas, though some stations in Jackson such as the Wal-Mart Murphy Oil gas station were selling gasoline for $3.41 that day.

In his letter to Freilich, Fahey said Freilich's letter "makes it seem like we went from $3.56 on September 10th to $4.09 on Sept. 11th in one grand price gouge. Obviously not true."

A representative of the Missouri attorney general's office said the office would not comment on an ongoing investigation. The attorney general's office received 337 storm, disaster and price-gouging complaints during and shortly after the eye of Hurricane Ike passed through the area Sept. 14.

bblackwell@semissourian.com

388-3628

Pertinent address:

1024 North High Street, Jackson, Mo.