WASHINGTON -- The U.S. House has approved legislation (H.R. 1252), the Federal Price Gouging Prevention Act, which would outlaw gasoline price gouging, reported the Associated Press. The bill passed by a vote of 284 to 141 on Wednesday.
The legislation would penalize individuals or companies for taking unfair advantage or charging unconscionably excessive prices for gasoline and other fuels. Opponents said the language was too vague and that the Federal Trade Commission (FTC), which would enforce the law, has not clearly defined price gouging.
I don't know what unconscionably excessive' means, said Representative Joe Barton (R-Texas). The bill's chief sponsor, Rep. Bart Stupak (D-Mich.), said he had no doubt the FTC would be able to determine price gouging once the agency had a law to uphold.
The measure would establish the first federal law against energy price gouging. The bill calls for penalties of up to $150 million for companies and up to $2 million and 10 years imprisonment for individuals found to be engaged in price gouging.
The FTC now can investigate price manipulation under antitrust laws. Currently, 29 states have price gouging statutes; enforcement varies widely. Stupak's proposal only would go into effectand then for just 30 daysif the president declared an energy emergency. The FTC has investigated allegations of price manipulation, but has found no widespread violations. In a report last year, the agency said an investigation after Hurricane Katrina hit in 2005 uncovered 15 incidents that could have been price gouging. But other factors also could have explained the high prices, it said.
The House's decision to move ahead on the price gouging measure was viewed as giving lawmakers the chance to vote on gasoline prices before Congress leaves for a weeklong vacation, AP said.
Opponents, including the Bush administration, which promised to veto it, said the legislation was too vague and would amount to price controls and in some cases bring back long gas lines reminiscent of the 1970s. It would harm consumers, the very people the bill is touted to protect, the White House said in a statement to lawmakers.
Rep. Roy Blunt (R-Mo.) said the bill would mean undue hardship for...people trying to make a living including mom and pop grocery or gas station owners.
The Petroleum Marketers Association of America (PMAA) said in a Capitol Hill report that the legislation will undermine the marketplace and will likely create shortages and long gas lines during emergencies. This is not good public policy and PMAA will continue to fight it at conference.
American Petroleum Institute (API) president and CEO Red Cavaney said in a statement: We're disappointed the House is making this bill the cornerstone of its energy policy. It is a flawed political solution to a matter that needs a long-term, viable solution, which includes increased energy efficiency, enhanced access to traditional, domestic oil resources, and diversification of energy supplies.
He added, The legislation is a cousin of the disastrous 1970s price and allocation controls, which created product shortages and put consumers in gasoline lines. It is discouraging that the lessons of the past are being ignored, which could harm consumers and the nation's energy security. The legislation will discourage bringing more supplies into the market and discourage greater efforts at energy conservation. By capping prices, it would likely spur consumer demand while at the same time discouraging additional supplies. In other words, the legislation will do the exact opposite of what's needed to bring down prices and strengthen the nation's energy security.
National Petrochemical & Refiners Association (NPRA) executive vice president Charles T. Drevna, said, Price gouging legislation is a solution in search of a problem and totally contradicts the advice given by the [FTC]. The federal government has found no evidence of market manipulation or gouging. At a time when gas prices are higher than normal because the traders have reacted adversely to lower than normal inventories stemming from necessary facility maintenance, passing legislation may provide a good political talking point, but it'll take far more creative talking points to address the real problems created down the road by this legislation.
Click here to view a summary of H.R. 1252, The Federal Price Gouging Protection Act.
Click here to view the full text of the legislation.
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