Missouri Attorney General Jay Nixon has charged a handful of Gas Stations for Price Gouging in the wake of Hurricane Katrina. Some are questioning his motives. Here's Why...

Missouri Attorney General Jay Nixon has charged a handful of gas stations mainly in Southern Missouri with price gouging claiming they inflated their profit margins over 400 percent right after the Hurricane Katrina Disaster, That's right 400 Percent like those no good Gougers up and throw away the key!

Not so fast, let's first examine the facts. The Funny thing is the gas stations that were charged with price gouging were charging no more then other local stations who were not charged gouging.

What does a 400 Percent Profit margine really mean? At first glance one would think if you are making 2 cents a gallon and you now increase your profit margin 400 Percent you would be making 8 cents a gallon. But if the gas currently in your underground tank cost't you $2.97 a gallon and any new gas you buy will cost you $3.17 a gallon should that 8 Cents per gallon profit be addded to your current price cost or future price cost. Even if you raise your gas price to $3.16 a gallon it could be argued that you are loosing money because any new gas you purchase will cost you $3.17 a gallon.

That is precisely the arguments being made by the Gas Stations accused of Gouging by Missouri Attorney General Jay Nixon that he is not taking into account the replacement cost of the gasoline.