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Apr 26, 4:15 AM EDT

AG: Arizona needs price-gouging law in wake of rising gas costs

PHOENIX (AP) -- As gasoline prices continue to rise, Arizona Attorney General Terry Goddard is urging tighter controls on oil company profits.

Goddard has released a report showing that petroleum industry profits nearly tripled last year immediately after Hurricane Katrina sent the average pump prices to an all-time high in the Phoenix metropolitan area.

In the past month, gasoline prices went up 57 cents to an average of $2.98 as of Tuesday.

The results of Goddard's gas-price investigation conducted after average prices last year soared beyond $3 a gallon found no evidence that any Arizona laws were broken.

But Goddard said the industry raked in big profits after Hurricane Katrina plowed through the Gulf Coast's refineries and oil rigs.

Other factors that led to last year's record prices included a fragile fuel-delivery system, tight gasoline supplies and higher demand after Katrina.

Goddard's investigation found that gasoline retailers' and wholesalers' gross profits - which typically range from 8 to 12 cents per gallon - soared to 20 to 30 cents per gallon one month after the hurricanes hit.

The investigation was based on an examination of the books and fuel contracts of 45 gasoline wholesalers and retailers from Aug. 1 through Sept. 9.

Goddard said refineries in California enjoyed the largest windfall, but he said the average profits of wholesalers and retailers soared, too.

"What we found was disturbing, the tendency to take profits at a time of maximum distress," Goddard said. "There was substantial profit-taking, and it seemed to be across the industry."

Goddard said the report is evidence that Arizona needs a price-gouging law.

Such a bill, sponsored by House Minority Leader Phil Lopes, D-Tucson, has gone nowhere in the Legislature this session.

Gasoline profits typically vary widely depending on the type of retail establishment. Many stations that sign contracts with major oil companies such as Chevron or Shell often have their profits locked in at a fixed amount per gallon.

Independent, non-branded stations often pay the spot price of gasoline, which can make profits swing widely.

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Information from: The Arizona Republic, http://www.azcentral.com