"Unconscionably Ridiculous" Price Gouging Laws
The chart above appeared in today's Detroit News, as part of my commentary "Energy Bill May Gouge Consumers: Price Controls, Taxes Would Curtail Oil Exploration and Hurt Workers."
"In the name of supposedly protecting consumers, Congress also wants to empower the Federal Trade Commission (FTC) to prosecute companies and individuals who engage in "price gouging" for gasoline and other petroleum products.
Leaders want this even though a congressionally-mandated FTC study of gasoline price increases in the aftermath of hurricanes Katrina and Rita two years ago found no evidence of widespread price gouging or any anti-competitive behavior. The FTC concluded that the price increases were due to the market forces and not to any illegal manipulation by oil companies.
"Price gouging" provisions in the energy legislation could have a chilling effect on the oil market. The severe civil and criminal penalties -- substantial fines and possible jail time -- would force everyone in the oil industry, from the biggest refiner to the smallest gas station, to reconsider everyday business decisions, including whether they should remain open, particularly in disaster areas.
Gasoline suppliers and wholesalers may choose not to move any additional supplies into affected areas when doing so exposes them to possible fines and jail time if the government finds them guilty of the ambiguous crime of "unconscionable pricing."
In that case, consumers certainly won't be better off when they face artificial, government-created shortages of gasoline after future natural disasters."