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14 ■ JUNE 7, 2021 NEWS

Price-Gouging Lessons From the East Coast

Pipeline Shutdown

By Jason A. Levine

Shell gas station and service center in Baltimore. Aug. 18, 2020. Photo: Diego M. Radzinschi/ALM
he ransomware attack on a major East Coast District of Columbia currently ban price gouging,
pipeline May 7 triggered fuel shortages and and nearly all other states have laws against “unfair”
Tincreased retail gasoline prices in many areas trade practices that effectively do so. Typically, state
of the country. This led to claims of price goug- price-gouging laws are triggered by an emergency
ing, prompting the governors of Georgia, Virginia, declaration. When evaluating price-gouging claims,
North Carolina and South Carolina to declare states prices of covered products are usually measured
of emergency and trigger prohibitions on price against those charged within some short time frame
gouging for gasoline. before the emergency began.
The crisis illustrates what state governments can The level of price increase that constitutes poten-
do in response to price shocks, and also teaches how tial “gouging” varies widely among states, as does the
companies should address pricing issues during scope of products covered by price-gouging statutes.
emergencies. Safe harbors also differ among states but generally
The term “price gouging” refers to unjustified allow the “pass-on” of cost increases incurred by the
and extreme price increases—typically for basic seller, including increased costs caused by the emer-
necessities—intended to profiteer from a natural gency. Most price-gouging statutes vest enforcement
disaster or emergency. Thirty-nine states plus the power with the state attorney general. Remedies

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