WASHINGTON -- With Congress potentially moving forward on a law to penalize oil companies and gasoline retailers 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, reported the Associated Press.
The study, released by the American Council for Capital Formation, argues that such legislation would cause long lines at gas stations and fuel shortages reminiscent of the 1970s energy crisis. Oil companies, worried about being penalized for price gouging, [image-nocss] 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 & 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 companies some reluctance about exploring for new supplies.
The study comes as nationwide average gasoline prices hit $2.78 a gallon for regular on Monday, up 25 cents from last month and nearing last summer's highs of more than $3 per gallon, according to the AAA travel club's national survey of gas stations.
Representative Bart Stupak (D-Mich.), along with 85 other House members introduced the bill, 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 for individuals, who also could face jail sentences. The House passed a similar bill last year, but it died in the Senate. Stupak's bill would give the Federal Trade Commission (FTC) the power to investigate and fine companies and people who boost the price of energy. The rules would cover gasoline, heating oil, natural gas, crude oil and propane.
Though gasoline prices this year have not yet become the emotional public issue of years past, Stupak said he is optimistic that 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, Stupak said. All we're saying is: Just justify your costs. If you can justify your costs, you have no fear of this legislation.
The FTC said last year that 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 Chairperson 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. But she predicted in November that Congress would pass a price-gouging law despite her warnings that the nation doesn't need one; 29 states have price-gouging laws, but they vary widely, and some go into effect only during emergencies.
Click here to read the complete study.
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