The old cartel needed a smoky back room and a handshake. The new one needs a vendor contract with Kalibrate.
Fourteen California drivers filed a class action Monday accusing BP, 7‑Eleven, Circle K, Marathon, Walmart, and Albertsons of using an artificial‑intelligence pricing tool to coordinate gasoline prices — and the first law they broke, the Cartwright Act, has been on the books since 1907. The second is Assembly Bill 325, a California statute that took effect January 1 specifically to outlaw algorithmic price‑fixing. The ink was barely dry before it was tested. The complaint, filed in Sacramento federal court, names the tool, the chains, and the mechanism — and the mechanism is simple enough that calling it “AI” flatters it.
A station doesn’t need to call its competitor and whisper a number anymore. It subscribes to a service that ingests everyone else’s real‑time price data and recommends a price — a recommendation every subscriber follows, because following the recommendation is the point. It is a black‑box trust, and it has the same effect a smoke‑filled room had: no station undercuts the next, no competition disturbs the take, no driver catches a break. The complaint says that when every station on a corridor subscribes to the same Kalibrate algorithm, “optimize” means the same number at every pump. Not because anyone called anyone. Because the software called everyone at once.
The geography of the extraction is concrete. California drivers pay the highest gas prices in the nation — $5.58 for a gallon of regular against a $3.93 national average, according to AAA — and the squeeze is so constant that the governor spent weeks urging the public to skip Chevron over high gas prices. The complaint alleges the AI scheme has pushed prices as much as thirty cents a gallon higher in the most saturated markets. Thirty cents sounds modest until you multiply it: the plaintiffs’ attorneys calculate that each penny costs California drivers an extra $134 million per year. At thirty cents, the algorithm’s tithe runs north of four billion dollars — extracted at the pump, one fill‑up at a time, from commuters and the mother checking the gauge on the way to daycare pickup.
This is not a story about six gas station chains and one pricing vendor. It is a story about what happens when an industry replaces the handshake with software and calls the result market intelligence. A traditional cartel distributes a single price among competitors. A hub‑and‑spoke conspiracy routes the price through a common intermediary. Providing each competitor with the same algorithm that converges on the same output is a cartel with better networking. The defendants will say, when they say anything, that the algorithm merely reflects market conditions — that information is not coordination, that real‑time data is just good business. They will say it the same way the landlord whose building runs the same property‑management software as the building next door said rents just happened to rise in tandem. The RealPage antitrust settlement already tested the question of whether coordinated pricing through a shared algorithm produces the appearance of competition while eliminating its substance. The answer looked expensive.
And if the algorithm absolves the station of the act? — well, the gasoline pump has always been a fine place to watch the two‑tier price of lawbreaking. If the man behind the counter pockets a few dollars from the till, he gets a record. If the company that owns the station funnels four billion dollars a year through a dashboard, the defendants, asked for comment, give the silence that always rewards a four‑billion‑dollar drainage through a piece of software. No cuffs, no perp walk. The Cartwright Act lets the state recover damages and halt the conduct. It does not put middle managers in orange jumpsuits. The class of crime we prosecute and the class of crime we settle is not an accident of the statutes. It is a design feature of the statutes. The in‑group gets the fine. The out‑group gets the sentence. That is the machine.
And this particular machine I have watched since the OPEC embargo darkened the pumps in ’73. First the price spikes. Then the investigations find nothing actionable or the fines are priced into the next quarter. Then the price spikes again. The AI price‑fixing suit is novel only in the tool — the Federal Trade Commission spent years examining wholesale gasoline price manipulation on the West Coast; state‑attorneys‑general investigations followed every refinery outage and pipeline break; and a few years pass, and some law‑enforcement body produces a report documenting that the refineries and the distributors and the station chains have, between them, managed to raise the price far beyond what supply and demand would justify. No one goes to jail. The next outage comes. The price spikes again. The pattern is the machine.
Governor Newsom told Californians to skip Chevron. The attorney general investigates refiners. Now drivers are suing the stations themselves, and the complaint names not just the chains but the tool they use. The circle is closing on who, precisely, is doing the extracting — and the answer is increasingly a piece of software that no voter elected and no consumer chose, running inside every pump in the state, recommending the same number at every station, every day. The thirty cents per gallon is the price of not looking at what was always underneath. The algorithm’s tithe requires only a subscription fee and a plausible press release about market intelligence. The extraction runs the same either way.
Assembly Bill 325 did not pass itself. The California legislature enacted it on the first of this year because members could read the same economic literature the rest of us can: algorithms that monitor competitors in real time and recommend revenue‑maximizing prices produce coordination whether or not anyone picks up a telephone. The lawsuit is the first major test of whether that verdict has teeth. And if the past is any guide — if the settlement comes, the defendants admit nothing, and the price of gasoline in San Diego does not fall by one cent — then the fine will be paid by the drivers, at the pump, over the next ten years, invisibly.
The complaint has one line that should outlast every briefing schedule: the defendants “conspired to put an end to competition, joining an AI‑powered trust to ensure that no matter where a driver turns, the price for gasoline is artificially high.” That is the charge. That is the mechanism. That is what the law was written to stop. The blindfold doesn’t slip when the judge is wearing it on purpose.