Three California residents are suing a fuel pricing company and several gas station operators, alleging that they use artificial intelligence-based pricing systems to raise gasoline prices in an uncompetitive manner.
“Californians are being forced to pay surcharges that cannot be explained by crude oil costs, refining costs, environmental regulation, or taxes,” said the June 22 class action lawsuit, filed at the U.S. District Court for the Eastern District of California, Sacramento Division.
“Part of the cause of California’s astronomical fuel prices is an illegal algorithmic price-fixing scheme orchestrated by the algorithmic pricing company Kalibrate and some of the state’s largest fuel retailers.”
The company’s Kalibrate Fuel Pricing software, an algorithmic, AI-based pricing system, “connects directly to gas stations’ pumps and signs. Instead of lowering prices to attract drivers, Kalibrate Fuel Pricing relies on the data of competing gas stations to coordinate high prices and wring more money from the pockets of consumers throughout the state,” the lawsuit states.
This is contradictory to historical trends where gas stations have competed to secure customers by “aggressively undercutting” retail prices, the lawsuit said.
The “artificial surcharge” from the algorithmic pricing scheme inflicts a “severe, daily financial toll” on millions of Californians, the lawsuit said. For people whose livelihoods are tied to road transport, such as truck drivers, the higher gas prices eat into their incomes.
According to data from the American Automobile Association, a gallon of regular gasoline costs $5.56 on average in California as of June 23, the highest in the country.
A month ago, prices were at $6.11 per gallon amid US-Iran war tensions. A year ago, prices were still close to $5 at $4.66 per gallon.
California’s current gasoline price of $5.56 per gallon is more than $1.6 higher than the $3.92 national average.
In their lawsuit, the defendants said that Kalibrate Fuel Pricing even has a feature that enables almost all gas stations in a market to raise gasoline prices simultaneously.
Hellbound and Down 