The Congress is pushing a new bill to penalize oil and gas companies for price gouging. But a recent study found that the bill would could the national economy about $1.9 billion during a national emergency on the scale of hurricanes like Katrina and Rita.
The study argues that such legislation would cause long lines at service stations and fuel shortages redolent of the energy crisis in 1970s. It also noted that oil companies that are worried about being penalized for gouging would shy away from paying higher prices to bring in more supplies.
"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."
Authors of the study say the price gouging legislation would distort prices that would eventually cause energy giants some reluctance about exploring for new supplies. According to AAA's national survey of gasoline stations, the study comes as nationwide average gasoline prices hit $2.78 a gallon for regular unleaded Monday. The price is up 25 cents compared to last month's and it is nearing last summer's highs of more than $3 per gallon.
Rep. Bart Stupak, D-Mich., along with 85 other House members, has proposed a bill that would institute the first federal law against price gouging by oil and gas companies. The bill imposes criminal penalties and fines of up to $150 million for companies and $2 million on individuals, who could also be sent to jail.
It could be recalled that last year the House passed a similar bill. But the bill died in the Senate. Though gasoline prices this year have not yet become such a public sensation 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."
The bill would empower the Federal Trade Commission to investigate and fine companies as well as people who hike the price of energy. The rules would cover gasoline, crude oil, heating oil, natural gas and propane. The new bill, aimed at regulating oil prices, is perceived as vital to the industry and the manufacture of auto parts and product lines. As a fact, the bill could stress the importance of stability to boost the industry's potentials. The target is not just to promote quality parts and accessories like but most importantly, to attain price stability.
In 2006, 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.
Deborah Platt Majoras, the FTC Chairwoman, said that a federal law against oil company price gouging would be difficult to enforce and could hurt consumers by causing fuel shortages. However, she predicted in November that Congress would pass a gasoline price-gouging law in spite of her warnings that the country does not need one. By far, there are 29 states having price gouging statutes. But they differ widely and some are enforced only in the event of an emergency.
