Illinois Says Price Gougers Can Atone

The Illinois attorney general is notifying several gas stations that they can donate $1,000 to the American Red Cross or risk being sued for price gouging in the wake of Hurricane Katrina.

The office of state Atty. Gen. Lisa Madigan detailed the options in letters that began arriving at the 18 stations this week. Officials said gas prices at some Illinois stations rose as high as $3.63 a gallon after Katrina hit the Gulf Coast.

“When we’re in an emergency situation, such as we were, retailers have the obligation not to increase their prices to the general public over what wholesalers are charging them,” said Deborah Hagan, chief of the attorney general’s consumer protection division.

But one targeted station owner said his pump price only jumped 46 cents, to $3.25 a gallon, which was the amount his wholesale costs increased.

“I did nothing wrong,” said Richard Schwarz, president of Trimble Oil Co. “I can sleep at night, let’s put it that way.”

The letters say station owners have until Jan. 5 to accept the donation offer or Madigan’s office will consider filing suit. State law allows the attorney general’s office to negotiate before taking consumer fraud cases to court.

Hagan said the office based the approach on a state lawsuit settlement that allowed a gas company that increased prices to more than $5 a gallon after the Sept. 11 attacks to pay $25,000 to Red Cross.