By Bonnie Washuk,Staff Writer

AUGUSTA – Maine Attorney General Steve Rowe said Friday that he was “disappointed and upset” at retail gas stations for not lowering prices considering wholesale prices have fallen.

“That’s bull,” responded Jim Grimmel, owner of Grimmel’s Service Station in Lewiston.

A spokesman for the Maine Oil Dealers Association said prices are on their way down and Rowe is acting “premature.”

As the controversy brewed Friday, prices at some pumps in Lewiston went down, some by 20 cents.

Rowe said his office has been monitoring prices after they exploded after Hurricane Katrina, which shut down Gulf Coast refineries. Gas prices “spiked immediately,” Rowe said.

Angry consumers called Rowe’s office, who defended gas stations, explaining that they had to increase prices or they would not be able to purchase their next tank of the more expensive gas.

But now, many stations in Maine “are having it both ways,” Rowe said.

On Friday, prices ranged between $2.99 to $3.30 throughout the state, not as low as they should be, Rowe said. The wholesale price at South Portland tanks dropped between 58 cents to 50 cents Wednesday. Not enough of that drop was being passed on to consumers, Rowe complained. Prices should not both “jackrabbit up, and snail down,” he said.

Rowe declined to say whether any legal action would be taken. Maine’s law says that price gouging happens when prices are at “unconscionable levels.”

“We’re carefully evaluating some of the price margins,” Rowe said. “I’m not an expert. But I know enough to know the prices should be lower.”

Meanwhile, while the big oil companies reporting record profits, Rowe said he’s working with a group of 40-plus state attorneys general to probe the cause of higher costs. The group is tracing gas prices, from the stations to the wholesaler to the refineries and the oil companies, he said.

Maine retail station owners are “hard working, honest people,” Rowe said, but the prices should be lower. “I’m disappointed and upset that the prices have remained high.” Residents cannot do without gas, he said. It’s reasonable to expect pump prices go down when the wholesale price goes down.

While pumping gas, Grimmel sharply disagreed that station prices are out of line. When wholesale prices went up after the hurricane, he had to boost prices. “You might have gotten a load for $2.25, but now you’ve got to pay $3.61.” If a station kept the price at $2.25, “he’d be cleaned out. He’s got to stay with the street price.” Suppliers were warning stations supplies may be allocated, he said.

After he and other retailers sell the gas they paid higher prices for, “this thing will level off” and prices will fall, Grimmel predicted. But customers are buying less gas, especially those with SUVs. So the gas is taking longer to sell, Grimmel said.

As wholesale prices fall a station may “on occasion make a little bit more,” Grimmel said. That station is making up for losses experienced during the year when it cut profits to stay competitive, he said.

On Friday his regular sold for $3.19 per gallon, a load he paid $3.09 for, Grimmel said. “So I’m making a dime profit. It’s possible some stations are making a little more than that, but they don’t want to find themselves out of gas.”

Jamie Py of the Maine Oil Dealers Association said Maine’s AG doesn’t understand the market. The price hikes after Hurricane Katrina were historic and “unprecedented,” Py said. “We’ve never seen anything like Katrina. It was an aberration” that stressed supply, demand and price.

Residents may not believe it, but Py insisted that pump prices “lagged way behind” wholesale prices after the hurricane. “The wholesale price outstripped the retail price dramatically.”

Retail prices move up and down slower than wholesale, Py said. Like Grimmel, he predicted prices will fall.

As Rowe’s office looks into the matter, Py predicted “they’ll see prices didn’t go up as fast as wholesale.”