Stupak's Sure Cure ("Federal Price Gouging Prevention Act") Sucks

William C Montgomery
by William C Montgomery
stupak s sure cure federal price gouging prevention act sucks

Last week, the U.S. House of Representatives passed H.R. 1252. The sternly titled "Federal Price Gouging Prevention Act" established penalties for people who hoik-up gas prices to take "unfair advantage" of U.S. consumers during an "energy emergency." The Right condemned the act as stealth nationalization of the American oil industry. The Left condemned the bill for not going far enough to rein in Big Oil. So, is H.R. 1252 a well-intentioned congressional misfire or part of a great political swindle? Yes.

Representative Bart Stupak is the sponsor of this affront to common sense and economic reality. In case politically-insensitive voters were motoring under the impression that price gouging has a relatively minor impact on current national gas prices– as compared to, say, the effects the laws of supply and demand– Stupak was ready to set them straight and sort it out.

"[Americans] want relief at the pump," Stupak proclaimed. "And that is what we are doing."

Stupak was also happy to add the requisite spin to his sham cause-and-effect conundrum. "Every member [of the House] has a choice: side with big oil or side with consumers who are being ripped off at the gas pump."

Stupak's act would punish individuals and/or corporations that charge "unconscionable" prices for gas and other petroleum distillates. Corporate violators would be subject to up to $3m in civil fines, and $150m in criminal fines.

Adding karmic payback to the deal, any fines collected would be used to "provide assistance under the Low Income Home Energy Assistance Program administered by the Secretary of Health and Human Services."

Despite Stupak's legislative zeal, the political Left isn't happy with H.R. 1252. For one thing the act only applies after a Presidential declaration of a renewable, thirty-day "energy emergency." "In other words," complains the Corporate Crime Reporter blog, "almost never."

The Director of the Public Citizen non-profit consumer advocacy organization is equally disgruntled. Tyson Slocum says H.R. 1252's "unfortunate language" proves that the oil industry "still holds sway over the Democratic Party." The Rhode Island native predicts more symbolic jabs. "Are you going to see the Democrats taking big swings at Big Oil? No."

At the other end of the political spectrum, former Nixon speech writer, economist, actor and game show host Ben Stein used his Yahoo! Finance column to pronounce the Federal Price Gouging Prevention Act de facto pricing control.

"This regulation could be triggered by actions that are basic to the free market," Stein railed, for exampling rising gas prices due to shortages caused by war or natural disasters. (As if.)

"In the most elemental terms," Stein opined, "the Stupak bill punishes oil companies when the free market is working as it should, allocating supply by means of the price system."

In Stein's estimation, drivers unable to find gasoline at times of crisis would suffer most from the bill's powers, not high-paid corporate big-wigs. Of course, the Executive branch was down with that.

"This bill could… bring back long gas lines reminiscent of the 1970s," the White House warned. "Gasoline price controls are an old– and failed– policy choice that will exacerbate shortages and increase fuel hoarding after natural disasters, denying fuel to people when they most need it."

Political posturing aside, the act has enough holes to accommodate several hundred thousand tankers of premium-priced petrol.

The bill proscribes selling gasoline or petroleum distillates at "unconscionably excessive" prices that "[indicate] the seller is taking unfair advantage of the circumstances related to an energy emergency to increase prices unreasonably." The act does not define "unfair advantage" or "unconscionably excessive."

The proposed law stipulates that federal investigators must prove that its violators did "grossly exceed" a 30-day average pre-emergency price, or "grossly exceed" prices of competing sellers.

Without a proper definition of "gross excess," the law would leave federal prosecutors and courts almost as powerless as they are now (which is not powerless at all, but that's another story).

Stupak's bill also instructs the feds to pause and ponder conditions attributable to local, regional, national or international market conditions, and "additional costs, not within the control of that person, that were paid, incurred, or reasonably anticipated by that person, or reflected additional risks taken by that person to produce, distribute, obtain, or sell such product under the circumstances."

Let's face it: any lawyer who couldn't beat Stupak's rap needs a new profession. That said, despite its inherent inanity, H.R. 1252 is a brilliant piece of legislation.

Democrats are sending President Bush a bill so fundamentally bone-headed that the Commander-in-Chief has no choice but to veto it. The Dems can then accuse the GOP of being Big Oil puppets during the upcoming national election cycle. Democratic candidates can also take credit for trying to protect you, the American people, from price gouging by the evil oil companies during times of crisis.

In truth, they've done nothing of the kind.

Click here to view HR 1252 in its entirety.

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2 of 72 comments
  • Wsn Wsn on Jun 03, 2007
    thebigmass: Hussein would have loved to trade freely with us. In addition, trading with him would not have led to the (increased) strife with the rest of the Middle East that the war has created. In turn, supply would conceivably be greater, reducing gas prices. Glance at the price at your local gas station. Can you honestly say we went into Iraq for oil? 1) I agree that for cheaper oil, it's best to work with Saddam. Let him rule Iraq and there will be stable oil output. And he would do whatever the US asks. 2) But Bush did go into the war for oil and arms contracts. You see, US is still the world's No.1 oil producer. By raising the oil price, lots of companies benefit. Not your average driver, but certainly your average oil stock holder. But somehow, he mis-managed it and they cannot really get any oil out of Iraq. It's more like a Detroit-3-cannot-manage-properly type of thing. In other words, Bush is no better than Wagoner in leadership and judgement.
  • Landcrusher Landcrusher on Jun 03, 2007

    For anyone who thinks the oil companies are making too much profit, I would like to remind them that they could start an oil company. Or, they can buy oil company stock, and share in the profits. Iraqi insurgents are presently stealing oil from the pipelines and refining it in hidden refineries under the nose of the worlds best military. Jump on in boys, the water is warm, Exxon could use some real competition. GO FOR IT! Just please stop whining. I am sure we would all like to get whatever it is you produce for less (if indeed you actually produce anything of value).

  • Bd2 Other way around.Giorgetto Giugiaro penned the Pony Coupe during the early 1970s and later used its wedge shape as the basis for the M1 and then the DMC-12.The 3G Supra was just one of many Japanese coupes to adopt the wedge shape (actually was one of the later ones).The Mitsubishi Starion, Nissan 300ZX, etc.
  • Tassos I also want one of the idiots who support the ban to explain to me how it will work.Suppose sometime (2035 or later) you cannot buy a new ICE vehicle in the UK.Q1: Will this lead to a ICE fleet resembling that of CUBA, with 100 year old '56 Chevys eventually? (in that case, just calculate the horrible extra pollution due to keeping 100 year old cars on the road)Q2: Will people be able to buy PARTS for their old cars FOREVER?Q3: Will people be allowed to jump across the Channel and buy a nice ICE in France, Germany (who makes the best cars anyway), or any place else that still sells them, and then use it in the UK?
  • Tassos Bans are ridiculous and undemocratic and smell of Middle Ages and the Inquisition. Even 2035 is hardly any better than 2030.The ALMIGHTY CONSUMER should decide, not... CARB, preferably WITHOUT the Government messing with the playing field.And if the usual clueless idiots read this and offer the tired "But Government subsidizes the oil industry too", will they EVER learn that those MINISCULE (compared to the TRILLIONS of $ size of this industry) subsidies were designed to help the SMALL Oil producers defend themselves against the "Big Oil" multinationals. Ask ANY major Oil co CEO and he will gladly tell you that you can take those tiny subsidies and shove them.
  • Dusterdude The suppliers can ask for concessions, but I wouldn’t hold my breath . With the UAW they are ultimately bound to negotiate with them. However, with suppliers , they could always find another supplier ( which in some cases would be difficult, but not impossible)
  • AMcA Phoenix. Awful. The roads are huge and wide, with dedicated lanes for turning, always. Requires no attention to what you're doing. The roads are idiot proofed, so all the idiots drive - they have no choice, because everything is so spread out.