WASHINGTON -- A bill being written by U.S. Senator Maria Cantwell (D-Wash.) would make price gouging a federal offense and heavily fine violators, reported the Seattle-Post-Intelligencer.
Another bill to be introduced in the U.S. House of Representatives will call for increased fuel efficiency, and still another, to be introduced in both houses, would impose a windfall profit tax on oil companies, said the report.
The U.S. Department of Energy has set up a hot line to take calls about suspected price gouging. The agency has received 26,001 [image-nocss] calls since August 28, the report added.
Attorneys general in 45 states, including Washington, have started highly publicized investigations of suspected illegal pricing. Though no evidence of price gouging has been found in Washington, Attorney General Rob McKenna said he is monitoring prices and would take action against any company that engages in illegal business practices.
Everywhere you look, some official or agency is bearing down on high gas prices, promising to right wrongs and help beleaguered consumers, according to the report. But the full-throttle approach is deceiving. As gasoline prices hover around $3 a gallon in many parts of the country, a new reality is coming into focus: The federal government and many states are virtually powerless to combat high prices, even if they are manipulated illegally, said the newspaper.
There is no specific federal law against price gouging on gasoline, it said. In cases in which violations are suspected, the Federal Trade Commission (FTC) must use broader and more cumbersome laws regulating antitrust practices and collusion between businesses. The FTC is the government's front-line enforcer of consumer protections, but, to date, the agency has never brought a gasoline price-gouging case. In fact, the federal government does not even have a clear definition of what price gouging is.
The federal government really is very impotent in dealing with gouging issues in the absence of collaborative behavior, Representative Jay Inslee (D-Wash.), told the Post-Intelligencer. We really don't have a tool in our toolbox federally to enforce this.
Guy Caruso, the head of the Energy Information Administration (EIA), which collects and analyzes pricing data for the Energy Department, conceded that under current law, the definition of what constitutes price gouging is very nebulous.
So while the Energy Department continues to collect information from its hot line and diligently passes on promising tips to the FTC, legal and business analysts say there is little chance a case will be made, the report said. Moreover, federal officials say that making a case is incredibly difficult and time-consuming. The last time the FTC looked hard at the issue it drilled a dry hole, concluding after three years of work that unusually high gasoline prices in Washington, Oregon and California were the result of normal market forces.
The investigation uncovered no evidence that any refiner had the ability profitably to raise price marketwide or reduce output at the wholesale level, nor did it find a situation in which a refiner adopted redlining in a metropolitan area and increased marketwide prices, the FTC said in its final report, issued in 2001. As a result of these findings, the commission voted to close the investigation.
States have a bit more muscle, but their record is no better, said the report. In most cases, states' price-gouging protections kick in after a governor declares an emergency. That designation limits price increases to a narrow band based on an average price over the previous month.
Inspectors in New Jersey, for example, swept across the state last week checking 400 stations suspected of violating price laws. More than 100 violations were issued, but not one was for price gouging. Stations were cited for raising prices more than once in 24 hours.
In Alabama, Attorney General Troy King issued subpoenas to more than 20 gasoline retailers seeking detailed price information. Even if the information is promising, it will take months to pursue charges.
Cantwell is promising to introduce legislation to give the FTC specific authority to investigate price gouging and issue fines. The bill also is likely to require the government to more closely monitor the gasoline production and supply chain to reduce price manipulation. It would empower the president to declare an emergency that would trigger the anti-price-gouging powers. Cantwell aides said passing the bill would help protect consumers because the markets would be aware of the new power whether it is used or not.
The fines could be heavy. One proposal calls for a $1 million fine for every violation, with that amount tripling to $3 million if the violation occurs during a state of emergency.
Whatever form the legislation takes, its overarching purpose will be to give government sharper teeth. We need to make price gouging illegal, Cantwell said last week. We need to make sure that there is a federal price-gouging law on the books, so that in times of national emergencies, oil companies aren't tempted to rake in outrageous profits. (Click here to view Cantwell's statement.)
Senate aides would not predict the chances Cantwell's bill has to pass.
Meanwhile, Rep. Robert Menendez (D-N.J.), is drafting similar legislation in the House that, unlike the Senate bills, includes a tax on windfall profits collected by oil companies. Americans are now paying 60% more than they did well before the hurricane, and this has a dramatic impact on an average American family, he said. (Click here to view Menendez's statement.)
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.