Californians who have felt the sting of gas prices as low as $6 to $7 a gallon in recent months may finally get some relief if a proposed class action lawsuit moves forward.
The lawsuit, filed June 22 in the Eastern District of California, accuses several major gas station operators of rigging pump prices by using AI-driven pricing software from Calibrate Fuel Systems, a tool that allegedly uses competitor data to influence fuel prices. The appeal targets more than 1,700 gas stations across the state, including BP, Walmart, Marathon Petroleum, 7-Eleven, Albertsons and Circle K.
The plaintiffs argued that, when the automated software was widely used, prices rose about 30 cents per gallon more than normal competition would have produced. The lawsuit calls it “an illegal algorithmic price-fixing scheme orchestrated by the algorithmic pricing firm Calibrate and some of the state’s largest gas retailers.”
California has the highest average gasoline prices in the country, and even a small increase from a price action can have a big impact on drivers.
A representative for Calibrate did not immediately return a request for comment.
Reducing algorithmic price adjustments
According to the lawsuit, the gas companies violated California law AB 325, which went into effect earlier this year to limit algorithmic price adjustments. AB 325 gives California plaintiffs an antitrust hook for claims that competitors used a shared pricing algorithm as part of a conspiracy to restrain trade, and makes it easier to defend such cases under the state’s primary antitrust law, the Cartwright Act.
A spokesperson for the California Energy Commission’s Division of Petroleum Market Oversight said the agency, which closely monitors petroleum markets, has put gasoline refiners, distributors and sellers on notice (PDF) about AB 325. “The DPMO will continue to communicate with market participants to ensure they are aware of their legal obligations in the Golden State,” a spokesperson told CNET via email.
Earlier this month, the Commission issued a warning that branded petrol could be more expensive than regular gas amid rising fuel prices caused by the Iran war. The Commission was already investigating overpriced gas stations in the state.
The lawsuit names three California plaintiffs: Joel Casciani of Chula Vista; Paola Hartman of Homeland; and Crystal Turnbough of Marysville. All three said they bought gas at inflated prices from gas stations of companies that use Calibrate Fuel Pricing.
It does not specify the dollar amount of damages the plaintiffs are seeking, but calls for the recovery of compensatory damages and an award of treble damages.
The suit comes as Calibrate recently launched a mobile app that allows gas retailers to set prices on their phones. According to the description, some of the features include “improved market insights, new mobile capabilities and AI-driven features designed to bring greater clarity to pricing decisions.”
Opposition to flexible and monitored prices
Dynamic pricing is not new. It was a fact of life for decades as algorithms are integrated into the marketing systems of companies. The most public examples have been The price of Uber increases of sharing horses and ticket prices between flights.
Recently, World Cup ticket prices reached record highs because they are placed on demand. While many World Cup fans criticized the practice, the US Chamber of Commerce defended the price swings, noting that after the initial rush, ticket prices dropped.
What has changed in recent years is that companies now have more information about their customers and, with the help of AI, can set prices based on what they know, a practice called. the price of surveillance. While variable pricing is based on demand, competition or local market conditions, surveillance pricing means that the company uses personal data about the customer to determine what price the customer is likely to pay.
New York state passed a fee-for-service ban in December, which went into effect recently. California lawmakers have also been trying to limit price surveillance, AB 2564 aims to stop retailers from setting prices based on personal information. Many digital rights and privacy activists support the proposed ban, including the Electronic Frontier Foundation, which says “price surveillance is wrong for privacy, equity and price transparency.”
