Contact: Richard Morrison, 202.331.2273
Washington, D.C., May 22, 2007—The Federal Price Gouging Prevention Act introduced by Rep. Bart Stupak (D.-MI) represents the latest attempt by Congress to return to the failed energy policies of the 1970s.
Rep. Stupak and his cosponsors – 86 Democrats and 3 Republicans – want to make it a crime to "sell crude oil, gasoline, natural gas, or petroleum distillates at a price that is unconscionably excessive or indicates that the seller is taking unfair advantage [of] unusual market conditions (whether real or perceived) or the circumstances of an emergency to increase prices unreasonably."
"By imposing criminal penalties of imprisonment and corporate penalties of up to $150 million a day, the bill represents an open invitation to ambitious state attorneys-general to try their hand at suits against Big Oil," says Iain Murray, Senior Fellow in Energy, Science and Technology at the Competitive Enterprise Institute. Yet every year, Murray points out, the Federal Trade Commission investigates claims of corporate-level price gouging and every year finds no evidence of it occurring. Rep. Stupak’s bill, by using subjective language like "unconscionably," is an attempt to use legal penalties to constrain the gasoline market to the detriment of the consumer.
"Gas price rises in unusual market conditions are a direct result of those market conditions," notes Murray. "It’s the invisible hand at work. Yet when people get hit in the pocketbook, they want someone visible to blame and Big Oil fits the bill. This is sheer populism and displays an outrageous ignorance of basic economics."
"If we want to go back to the gas lines of the Seventies," added CEI Senior Fellow Marlo Lewis, "this is a good way to do it. Constraining the ability of gas companies to set prices according to supply and demand is a recipe for rationing. In the end, there will be less gas available and the people who will get it will be those most prepared to wait in line."
CEI is a non-profit, non-partisan public policy organization dedicated to the principles of free enterprise and limited government.