Gas price-gouging bill criticized
WASHINGTON — With Congress potentially moving forward on a law to penalize oil and gas companies for price gouging, a new study says doing so would cost the economy about $1.9 billion during a national emergency on the scale of hurricanes Katrina and Rita.
The study, to be released today by the American Council for Capital Formation, argues that such legislation would cause long lines at service stations and fuel shortages reminiscent of the 1970s energy crisis. Oil companies, worried about being penalized for gouging, would shy away from paying higher prices to bring in more supplies, the study said.
“What we seem to learn from history is that we never seem to learn from history,” said former House Ways and Means Committee Chairman Bill Archer, R-Texas, a lobbyist and member of the group’s board, which includes the oil industry’s main trade group and other business interests. “Every time this has been tried before, it has been counterproductive.”
The study’s authors also warned that price-gouging legislation would distort prices, causing energy giants some reluctance about exploring for new supplies.
The study comes as nationwide average gasoline prices hit $2.78 a gallon for regular unleaded Monday, up 25 cents from last month and nearing last summer’s highs of more than $3 per gallon, according to AAA’s national survey of gasoline stations.
Rep. Bart Stupak, D-Mich., along with 85 other House members, has introduced a bill that would establish the first federal law against price gouging by oil and gas companies, imposing criminal penalties and fines of up to $150 million for companies and $2 million on individuals, who could also face jail sentences.
The House passed a similar bill last year, but it died in the Senate.
Though gasoline prices this year have not yet become the emotional public issue of years past, Stupak said he is optimistic his bill will get through the Senate this year.
“There is nothing in the legislation that would restrict the supply of oil to this country,” said Stupak. “All we’re saying is: Just justify your costs … if you can justify your costs, you have no fear of this legislation.”
Stupak’s bill would give the Federal Trade Commission the power to investigate and fine companies and people who hike the price of energy. The rules would cover gasoline, heating oil, natural gas, crude oil and propane.
The Federal Trade Commission last year said a nine-month investigation revealed a smattering of gasoline price gouging after Hurricane Katrina, but no widespread effort by the oil industry to manipulate the marketplace.
FTC Chairwoman Deborah Platt Majoras has said a federal law against oil company price gouging would be difficult to enforce and could hurt consumers by causing fuel shortages.
Nevertheless, she predicted in November that Congress would pass a gasoline price-gouging law despite her warnings that the country doesn’t need one. Twenty-nine states have price gouging statutes, but they vary widely and some go into effect only in the event of an emergency.