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News > World

Price Gouging Exposed in Aftermath of Harvey

  • A man uses a trash bag as cover from the rain while wading through floodwaters in east Houston, Texas.

    A man uses a trash bag as cover from the rain while wading through floodwaters in east Houston, Texas. | Photo: Reuters

Published 30 August 2017
Opinion

One report claimed that a local store in Houston was charging as much as US$99 for a case of drinking water.

Best Buy was accused of selling cases of water for more than US$40 in Houston, Texas, raising questions about price-gouging in the aftermath of Harvey in the region.

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Tweets surfaced Tuesday showing a Best Buy in Houston selling 12-packs of Smartwater for US$29.98 and 24-packs of Dasani for US$42.96.

A company official told CNBC that Best Buy doesn't sell water in multipacks and that the offer was a "mistake" made by "a few" employees at one location.

“Not as an excuse but as an explanation, we don't typically sell cases of water. The mistake was made when employees priced a case of water using the single-bottle price for each bottle in the case," a company spokesperson said via email.

CBS News reported that the Texas attorney general’s office has already fielded more than 600 complaints since Hurricane Harvey hit Texas on Aug. 25, mostly about drinking water and gasoline.

“In a few specific cases, we’ve seen US$3.50 for gas in Houston, US$8.50 for bottles of water and US$99 (for a) case of water. We also received a complaint about one Houston convenience store charging US$20/gallon of gas,” spokeswoman Kayleigh Lovvorn said in an email.

More than 30 states have passed anti-gouging laws. In Texas, it is illegal to charge consumers excessive prices for basic necessities during a national disaster. Violators can be fined as much as US$20,000.

But the Greater Houston and South Texas Better Business Bureau said gouging is a common problem following natural disasters, which often lead to shortages of certain products, many of which might be considered essential.

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"You're not supposed to artificially inflate prices of things that are emergency or needed during a disaster," Dan Parsons of the Better Business Bureau told CBS News.

As the Texas Gulf Coast is home to about 30 refineries that account for nearly 30 percent of U.S. capacity, prices at gas stations have risen.

Motiva Enterprises said early Wednesday it started closing its Port Arthur refinery, the country’s largest, “in response to increasing local flood conditions.” The plant won't open until flood waters recede.

Motiva had been steadily reducing production at the plant for days. Late Tuesday it was running at only 40 percent of its normal capacity. Motiva's decision followed a move by ExxonMobil to shut down its oil refinery in Baytown, Texas Sunday.

In all, at least 12 refineries are currently offline. Traders and analysts said the longer refineries remain shut, the more retail prices will increase.

Gas for September delivery, which expires Thursday, climbed as much as US$5.89 a gallon on the New York Stock Exchange, the highest in more than two years.

On Tuesday, the national average was US$2.378 a gallon, according to the American Automobile Association.

Meanwhile, some 195,000 people have registered with the U.S. government for financial assistance due to massive flooding in Texas, the Federal Emergency Management Agency has said.

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