UPDATE 5/25/11
FRANKFORT, Ky. (AP) -- A Franklin County Circuit Court judge has
ruled that Attorney General Jack Conway failed to meet the burden
of proof needed to warrant an injunction against Marathon Petroleum
Co., the Ohio-based firm that Conway suspects of price gouging in
the wake of recent storms.

Judge Thomas Wingate denied Conway's request for an injunction
on Wednesday.

The ruling came after last week's hearing in which petroleum experts offered contradictory testimony about whether Marathon illegally raised gas prices in April after heavy rains caused widespread flooding.

Conway had sought a court order requiring Marathon to reduce
prices to levels charged shortly before the storms. Since Conway
took the company to court, gasoline prices have fallen sharply.

WEB EXTRA: Statement from Attorney General Jack Conway on the Marathon Ruling

We are disappointed in today's ruling by the judge that denied our request for an injunction — an injunction that would have required Marathon Oil to keep its prices at or below what it charged before the declared state of emergency. Despite the judge's ruling, I am pleased that gas prices have gone down a little bit since we sought the injunction.

I pursued this case to protect the best interests of consumers across the Commonwealth, who are hurting right now. Today's ruling is limited to this particular injunction, and the judge was clear that it does not affect the ongoing and underlying price-gouging case against Marathon. I believe Marathon has engaged in price gouging, and we plan to aggressively pursue that case.

Additionally, I remain concerned that Marathon's dominance of the wholesale gasoline market in Kentucky allows a distortion of our gas prices. In certain areas of the Commonwealth, it actually has a 100 percent monopoly on wholesale supply. In the long term, we must address this problem, and I am turning over evidence we have developed to the U.S. Department of Justice's recently formed gas task force that is charged with investigating illegal activity in the oil and gas markets.

Jack Conway
Kentucky Attorney General

UPDATE 5/20/11
FRANKFORT, Ky. (AP) -- A Franklin Circuit judge expects to issue a ruling next week in a case alleging Marathon Petroleum Co. participated in price gouging.

Judge Thomas Wingate heard from petroleum experts Thursday who offered contradictory testimony about whether Marathon illegally raised gas prices after an emergency order was issued in April when heavy rains caused widespread flooding, according to The Courier-Journal.

Attorney General Jack Conway is seeking a court order requiring Marathon to restore prices it charged shortly before the emergency declaration and preventing Marathon from further price increases.

Marathon attorney Sheryl Snyder says Marathon's prices aren't set by weather conditions, but by the market.

Experts on wholesale gas prices are expected to testify at a hearing set for 9 a.m. Thursday.

Franklin County Circuit Judge Thomas Wingate declined to issue a restraining order Monday.

Attorney General Jack Conway alleged in a motion Friday that Marathon had violated an emergency order issued by Gov. Steve Beshear in late April after heavy rains caused widespread flooding. The state of emergency prohibits price gouging during disasters.

Sheryl Snyder, a lawyer for Marathon, told Wingate that Conway was seeking an injunction only because Tuesday is Election Day. Conway is unopposed in the Democratic primary for attorney general. Conway dismissed the argument, saying he was doing his job sticking up for Kentucky consumers.

On Friday, Jack Conway filed a motion for a temporary injunction in Franklin Circuit Court alleging that Marathon illegally raised the wholesale price of gasoline and other motor fuels in markets across Kentucky during a time of emergency.

“I want to thank Kentuckians who called or emailed our office to report the drastic changes in gas prices that reached more than $4 a gallon at the pump in many communities,” General Conway said. “Gas prices jumped about 30 cents overnight. The tips provided by consumers and retailers helped us bring this action that will hopefully provide some relief for Kentuckians who are struggling to put gas in the car and clean up from flooding.”

The motion alleges that Marathon violated Kentucky’s price-gouging statute that was triggered when Gov. Steve Beshear declared a state of emergency on April 26 in the wake of massive flooding.

“General Conway and I recognize the importance of protecting Kentucky consumers, particularly in the wake of recent devastating storms and floods,” Gov. Beshear said. “I issued the price-gouging executive order precisely so our Kentucky families will be protected from attempts to profit from disaster. I fully support the Attorney General’s ongoing efforts to investigate instances of price gouging and bring offenders to justice.”

The motion, filed Friday in the ongoing case against Marathon and its wholly owned subsidiary, Speedway LLC, for alleged price-gouging violations following Hurricanes Katrina and Rita in 2005, asks the court to require Marathon to lower its wholesale prices in all Kentucky markets to no more than the price charged on April 25.

The motion uses an example of the Louisville wholesale market to illustrate the allegations.

The motion alleges that Marathon’s wholesale price for regular 87 octane gasoline at its Louisville terminals on April 25 was $3.25 per gallon and that it raised its wholesale price to $3.48 on April 29 and up to $3.46 on May 9. Thursday’s rack price was $3.32. Wholesale prices for reformulated gasoline were raised from $3.45 to $3.65 and $3.61 on those dates. The wholesale prices vary depending on the location in Kentucky and the amount of fuel purchased, but similar reductions would be expected in all Kentucky wholesale markets, according to a press release.

Attorney General Conway is alleging that Marathon’s actions violate the price-gouging law, since the law only permits suppliers to increase prices if there has been an increase in costs to the supplier.

The Office of the Attorney General does not believe that cost increases in this case justify the price increases.

The memorandum supporting the motion alleges that Marathon’s increase of price was unsupported by any increase of costs, but instead was linked to an increase in the commodity spot market price and New York Mercantile Exchange future prices. Marathon has previously admitted in the case that spot market prices have been a primary factor in its pricing decisions.

A hearing on the motion is set for Monday at 9 a.m. in Franklin Circuit Court.