AG Racine Sues Major Gasoline Seller for Price Gouging at Dozens of DC Gas Stations

OAG Alleges Capitol Petroleum Group Overcharged Consumers for Gas and Unlawfully Doubled Profits During COVID-19 Emergency

WASHINGTON, D.C. — Attorney General Karl A. Racine today filed a lawsuit against Capitol Petroleum Group, LLC (CPG), a leading retailer and distributor of gasoline in the District of Columbia, as well as several affiliated companies, for illegal price gouging during the District’s COVID-19 emergency. The Office of the Attorney General’s (OAG) investigation revealed that even as wholesale gas prices dropped when the economy slowed in March and April 2020, CPG unlawfully doubled its profits on each gallon of gas sold to consumers at 54 gas stations in the District. OAG also alleges that CPG and its affiliates, Anacostia Realty, LLC, and DAG Petroleum Suppliers, LLC, unfairly increased profit margins they earned on gas distribution to other retailers. With this lawsuit, OAG is seeking a court order to stop CPG from violating the District’s price gouging and consumer protection laws, relief for consumers who were charged unfairly high prices, and civil penalties. This is the second lawsuit OAG has filed against a D.C. business for price gouging during the pandemic.

“Price gouging is illegal in the District, and companies may not unlawfully increase their profit margins at the expense of District residents during an emergency,” said AG Racine. “The overwhelming majority of the District’s businesses continue to follow the law. In this case, however, OAG’s investigation revealed that—despite lower gasoline prices during the pandemic—Capital Petroleum Group took advantage of the District’s consumers by illegally increasing the price of its products, instead of passing the cost savings along to District consumers as required by law.”

Protections under the District’s Natural Disaster Consumer Protection Act (NDCPA) went into effect when the Mayor declared a state of emergency on March 11. The NDCPA prohibits individuals or businesses from taking advantage of an emergency by charging higher than normal prices for goods and services. Specifically, the law bars retailers from increasing the amount they markup goods over their wholesale costs and requires them to maintain the same markup percentage that was in place 90 days before the emergency was declared. This means that merchants may not increase their profit margins during an emergency. Under the District’s Consumer Protection Procedures Act, companies are also prohibited from engaging in unfair trade practices, such as substantially increasing profit margins during an emergency.

CPG is a Virginia-based corporation that sells gasoline directly to consumers at 54 gas stations across the District. Together with its affiliates, it acts as a gas distributor to at least 14 other District gas stations. As part of a broad effort to monitor price gouging in the District, OAG opened an investigation into the prices CPG and its affiliates charged District consumers and retailers for gas before and after the Mayor’s declaration of the COVID-19 emergency.

In its lawsuit, OAG alleges that CPG violated District law by:

  • Engaging in price gouging during an emergency: According to data obtained by OAG, CPG took advantage of the emergency to roughly double its average retail profits per gallon of gas at the expense of consumers in potentially thousands of transactions—although gas prices were falling at the time. In the three months before the March 11 emergency declaration, CPG earned an average of $0.44 in profits per gallon of regular gas and $0.80 per gallon of premium gas that it sold to consumers. In the weeks following the emergency declaration, CPG earned an average profit of $0.88 per gallon of regular gas and $1.23 per gallon of premium gas that it sold.
     
  • Unfairly increasing profits on gas distribution: Following the Mayor’s emergency declaration, OAG alleges that CPG significantly increased their margins on gas sales made as a distributor. From December 2019 through March 9, 2020, CPG applied an average markup of 41.6% per gallon of gas sold as a distributor to other gas stations. By three weeks into the declared COVID-19 emergency, during the week of March 22-28, 2020, CPG was applying a markup of 149.8% to the prices it charged other retailers per gallon of gas.

A copy of the complaint is available at: https://oag.dc.gov/sites/default/files/2020-11/Capitol-Petroleum-Group-Complaint.pdf

With this lawsuit, OAG is seeking relief for harmed consumers, a court order to stop CPG from violating price gouging or consumer protection laws in the future, legal costs, and civil penalties. The penalty for price gouging in D.C. is $5,000 per violation.

The Office of Consumer Protection’s Director Ben Wiseman and Assistant Attorney General Graham Lake conducted the investigation that led to the complaint.

Report Price Gouging
To help OAG investigate price gouging complaints, consumers should attempt to identify the prices of goods and services before the emergency declaration on March 11. If you believe an individual or business is engaging in price gouging, submit a complaint to OAG by:

Latest COVID-19 updates: Visit www.oag.dc.gov/coronavirus and sign up for OAG’s newsletter at www.oag.dc.gov/newsletter.

For more District government COVID-19 updates visit: coronavirus.dc.gov

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