Dec. 16, 2008 — The California State Attorney General’s Office initial response to the gas price issue in Susanville is that nothing illegal is going on. On Monday, Dec. 8, Deputy Attorney General Margaret E. Spencer responded to a letter inquiring about the city’s abnormally high gas prices written by Susanville City Administrator Rob Hill last month.

“From the information set forth in your (Hills’) letter, it does not appear that any illegal conduct has occurred,” Spencer’s letter said. “Generally, and except under very rare conditions such as a declaration of emergency following a natural disaster, a retailer is entitled to set whatever price for a commodity that the market will bear.

“While price fixing is illegal, a prerequisite to the offense is the collusion among competitors to set prices. No such conspiracy is apparent from the facts available to us and, and indeed we have failed to find collusion among the various oil companies and/or their dealers in any previous investigations.”

Hill was prompted by the Susanville City Council to write a letter asking the State Attorney General’s Office to look into the gas prices in and around the city. This was fresh on the heels of the Lassen County Board of Supervisors asking County Administrative Officer John Ketelsen to send a similar letter.

In Hills’ Nov. 5 letter to the state, Hill compared the gas prices in the city and some surrounding communities on Oct. 30 to illustrate the gas price discrepancies. On Oct. 30, Hill said the average price of gas per gallon was $2.95 in Alturas and $2.75 in Quincy, while the average price in Susanville was $3.24.

Spencer’s response explained, “The reasons that Susanville gasoline prices are higher than its neighbors’ could include higher rents and other costs of doing business, or simply a conclusion by the dealers that the prices they set are what the market will bear.”

“There are no standards by which one could calculate a reasonable gross profit margin per gallon for retail fuel,” Spencer said, “Nor would such a figure have any legal significance.

“In theory, an unreasonable price would be one which consumers cannot and will not pay, choosing instead to purchase the commodity in neighboring areas where the price is lower.”

At the Dec. 9 county board meeting, District 2 Supervisor Jim Chapman cited a recent article in USA Today that broke down gas prices in all parts of the country. The article listed Lassen County as one of three counties paying the most for gas in California.

Chapman told Ketelsen to continue putting pressure on the State Attorney General’s Office.

Chapman also mentioned a phone call he recently received from one of the local gas vendors in town. Chapman said the vendor told him it was obvious that Chapman was not clued in and didn’t know what he was talking about.

The vendor proceeded to tell Chapman that in March, April, and May of this year, the gas vendors in the area took a 30-cent per gallon loss every time somebody bought a gallon of gas.

The vendor told Chapman he lost $45,000 in the process.

“Now there’s this differential in there we’re making back up,” Chapman said, mimicking what the vendor said to him. “Nobody gave us kudos for giving you cheap gas back in March, April and May, so now you give me this heartburn because we’re trying to recoup what we lost back then.”

Chapman told the vendor that seemed fair, but he didn’t like how the vendors weren’t telling the public about that being the reason why gas is so expensive.

Chapman concluded by saying if the State Attorney General’s Office digs into the issue, it will find a lot of stories.