California gas station chains accused of using AI to inflate fuel prices

In California, the state with traditionally the highest gasoline prices in the US, consumers have filed a class action against several of the largest gas station chains. The defendants include Walmart, Marathon Petroleum, BP and 7-Eleven. The allegation: the companies use artificial intelligence algorithms to illegally inflate fuel prices.

The core of the allegation

The plaintiffs say the defendants use AI-based dynamic pricing systems that track competitors' prices in real time and automatically adjust their own. As a result, prices rise in sync across all market participants: without explicit collusion, but with the same practical effect.

The key legal argument: US antitrust law prohibits not only explicit cartel agreements but also coordination that happens "tacitly," through shared algorithms or shared data. If an algorithm functionally replaces a phone call between competitors, courts may treat it as a violation of the Sherman Act, the main US antitrust statute.

The companies have not yet commented on the lawsuit. The upcoming hearings could produce one of the first major precedents on "algorithmic collusion" in fuel retail.

Algorithm instead of cartel: a growing trend

Lawsuits against algorithmic pricing have become an established trend in US courts over the past two years. The best-known precedent is the case against the RealPage platform: its rent-management algorithm used competitors' pricing data to recommend rent increases. The result was a synchronized rise in rents across the country. The case reached the US Department of Justice. In 2024–2025, similar claims were brought against airlines and hotel chains.

The pattern is similar everywhere:

• An AI algorithm takes competitors' prices as an input signal
• The system recommends or automatically sets a higher price
• All market participants move in the same direction without negotiating
• Consumers overpay, and the regulator sees signs of coordination
• Proving intent at the level of individual people is technically extremely difficult

It is precisely the difficulty of building an evidentiary case that makes these cases legally interesting, and dangerous for business: US law does not yet draw a clear line between "smart competition" and "algorithmic collusion."

Context: gasoline prices in California

California consistently ranks first in the US for gasoline prices. The gap with other states is explained by several objective factors: local environmental standards require a special fuel formulation, regional excise taxes are noticeably above average, and the geographic distance from refining capacity raises logistics costs.

However, consumer organizations and independent economists have long argued that these factors do not explain the entire price gap. The latest lawsuit is an attempt to prove that part of the gap results from coordinated behavior enabled by technology.

What this means

The California lawsuit is a warning to every business that uses dynamic pricing. Where an algorithm was once seen as a tool of efficiency and competitive advantage, it can now become evidence of a violation.

The precedent this case sets will affect more than gas stations: e-commerce, air travel, insurance and hotels will all be in the crosshairs. Any industry where AI sets prices will be watching the outcome of this case.