In the wake of the deep freeze that recently swept the nation, natural gas have taken the forefront among a slew of price gouging allegations. Last week’s winter storms caused natural gas spot market prices to spike, with some reporting up to a 100% percent increase. Reports also surfaced of spot prices for wholesale electricity in Texas’ power grid increasing more than 10,000%. In response, Minnesota Senator Tina Smith (D-MN) has not only encouraged federal regulators to investigate the price spikes, but has also requested regulators to “[i]nvoke, as appropriate, any emergency authorities available, including under the Natural Gas Policy Act, to allocate natural gas supplies at fair prices.” Whether natural gas prices exceeded allowable limits under applicable price gouging statutes currently in effect depends, among other things, on whether natural gas is within the scope of these laws in the first place.

As with many products, whether natural gas is covered under state price gouging laws varies state-by-state.  Certain state price gouging laws, like Vermont, apply to “petroleum or heating fuel products,” defined as “motor fuels, liquefied petroleum gas, fuel oil, kerosene, and wood pellets used for heating or cooking purposes.” Vt. Stat. Ann. Tit. 9 § 2461d(a). Illinois’ price gouging law, triggered by “[a]ny abnormal disruption of any market for petroleum products,” takes a similar approach, defining “petroleum product” to include motor fuels, and fuel used for heating or cooking purposes. 14 Ill. Code R. § 465.20-464.30.

Other states, however, more broadly cover “fuel” or “home heating oil.” For example, Minnesota, Alaska, Colorado, Idaho, and Texas cover “fuel.”  While Kansas, Kentucky, Rhode Island, Virginia, and West Virginia, to name a few, cover “home heating fuel” or “home heating oil.” However, some states only cover “gasoline,” which arguably does not cover natural gas. For instance, Tennessee’s price gouging law covers gasoline, but does not cover heating oil or fuel. Tenn. Code Ann. § 47-18-5103(a)(1). There are also states that broadly cover “goods and services,” such as Louisiana and Mississippi.

Fuel producers and suppliers are not necessarily without a defense. Alaska, for example, may allow for a price increase in fuel if “caused by normal fluctuations in the market for fuel based on supply and demand.” Alaska Ch. 10 SLA 20 § 26.  Kentucky may allow for price increases in home heating oil if the increase is “[g]enerally consistent with fluctuations in applicable commodity, regional, national, or international markets, or seasonal fluctuations.” Ky. Rev. Stat. Ann. § 367.374(1)(c). Similarly, Louisiana provides that a price increase is not a violation if it is “attributable to fluctuations in applicable commodity markets, fluctuations in applicable regional or national market trends.” La. Stat. Ann. § 29:723(A).

While essential goods and services related to the pandemic have been the topic of discussion regarding price gouging over the past year, energy and fuel suppliers and distributors should be aware that price gouging laws may also apply to them if covered by an emergency declaration.  Natural gas companies and others should also be aware that beyond state attorneys general investigating the price spikes, the Federal Energy Regulatory Commission has also announced that it “is examining wholesale natural gas and electricity market activity during last week’s extreme cold weather to determine if any market participants engaged in market manipulation or other violations.”

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Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.